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CO-OPERATION 


THE  MACMILLAN  COMPANY 

MEW  YORK  •    BOSTON   ■   CHICAGO    •  DALLAS 
ATLANTA    •    SAN   FRANCISCO 

MACMILLAN  &  CO.,  Limited 

LONDON    •  BOMBAY   •  CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA,  Ltd. 

TORONTO 


The  Prophet  of  Co-operation 


CO-OPERATION 

THE  HOPE  OF  THE  CONSUMER 


BY 
EMERSON  P.  HARRIS 

ASSISTED  BY 
EDGAR  SWAN  WIERS  AND  FLORENCE  HARRIS 


THE  MACMILLAN  COMPANY 


1920 

AU  rights  reserted 


Copyright,  1918, 

By  the  MACMILLAN  COMPANY 

Set  up  and  electrotyped.    Published  March,  1918. 


I'M) 


THE  TOILERS  OF  AMERICA, 

MANY  OF  WHOM  KNOW  UNDESERVED  WANT 
THROUGH  THE  REDUCTION  OF  THE  PUR- 
CHASING   POWER    OF    THEIR    HARD- 
EARNED  DOLLARS  BY  OUR  WICKED 
AND  WASTEFUL  MERCANTILE 
DISTRIBUTIVE    SYSTEM 

THIS   BOOK   IS   DEDICATED 


a^Ai 


FOREWORD 

All  my  life  I  have  felt  that  the  consumer  was  at  an  unfair 
disadvantage  in  buying. 

When,  for  eight  years  beginning  in  my  teens,  I  owned 
and  ran  a  country  store,  I  never  quite  saw  the  equity  of 
concealed  profits  which,  on  some  things,  were  several 
times  the  percentage  they  were  on  others. 

In  my  twenty-odd  years  of  advertising  and  publishing, 
and  several  years  of  editing  a  magazine  devoted  to  sales 
promotion,  I  have  always  thought  that  the  final  consumer 
was  treated  too  much  as  a  mere  incident,  that  he  had  too 
little  voice. 

Always  in  my  own  buying  I  have  felt  a  discontent  with 
my  total  ignorance  as  to  how  much  I  was  paying  the  mer- 
chant for  the  distributive  service  he  performed  for  me. 
Perhaps  he  was  getting  but  five  per  cent  of  the  retail  price, 
perhaps  sixty  per  cent. 

Buying  gives  one  a  sense  of  bondage  because  of  the  in- 
ability to  get  unprejudiced  information  about  any  article 
which  he  contemplates  buying.  The  only  party  who 
knows  the  facts  is  biassed  by  the  quest  of  profit. 

When,  in  191 1,  in  a  lecture  by  Prof.  John  Graham  Brooks, 
I  was  reminded  of  co-operative  buying  it  at  once  appealed 
to  me  as  a  way  out.  The  same  year  I  went  to  Europe  and 
visited  some  of  the  co-operative  stores,  and  have  been  a 
student  and  disciple  ever  since.  That  there  is  great  promise 
to  consumers  in  the  plan  I  have  no  doubt. 

My  assumption  of  ability  to  write  on  the  subject  is  not 
^        based  upon  my  superior  knowledge  of  co-operation,  but 
it  has  seemed  to  me  that  my  business  of  storekeeper,  pub- 
^        Usher  of  advertising  periodicals,  and  editor  and  writer  on 
advertising  and  selling  have  given  me  an  all-round  point 
of  view  which  is  helpful  in  getting  a  broad  conception  of 


Q. 


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Vlll  FOREWORD 

the  problem  and  setting  it  forth  sympathetically,  if  not 
adequately. 

I  am  greatly  indebted  to  many  people  for  information 
and  help.  Of  these  I  especially  wish  to  acknowledge  my 
obligation  for  much  information  and  inspiration  to  Edgar 
Swan  Wiers,  who  may  be  regarded  as  an  important  prophet 
of  co-operation,  and  to  my  daughter,  Florence  Harris,  for 
her  sympathetic  interest  and  insight  which  have  made  her 
suggestions  and  revision  exceedingly  valuable.  I  am  also 
indebted  to  Mr.  George  Keen,  Honorary  Secretary  of  the 
Canadian  Co-operative  Union,  Mr.  E.  Ames  of  San  Fran- 
cisco, Mr.  N.  O.  Nelson  of  New  Orleans,  and  Mr.  E.  M. 
Tousley  of  MinneapoHs  for  reports  on  co-operation  in  their 
respective  sections. 

Thanks  for  courtesies  are  also  due  to  Mr.  John  Gledhill, 
for  many  years  manager  of  the  English  and  Scotch  Whole- 
sale branch  in  New  York,  Mr.  Percy  Redfern,  editor  of 
the  Wheatsheaf,  Henry  J.  May,  secretary  of  the  Inter- 
national Co-operative  Alliance  of  London,  and  Scott  H. 
Perky,  Secretary  of  the  Co-operative  League  of  America. 

Emerson  P.  Harris. 

Montclair,  N.  J., 
February,  1918. 


CONTENTS 

PAGE 

Foreword vii 

Introduction,  John  Graham  Brooks xix 

Synopsis xxi 


PART  I.    THE  FAILURE  OF  OUR  MIDDLEMANISM 

CHAPTER  I 

Advertising  and  Salesmanship  vs.  The  Consumer 3 

Man  a  bundle  of  wants — Education  to  help  him  choose  wisely — 
Adverse  influence  of  present  system — Consumer  on  the 
defensive. 
Subtle  methods  of  modern  salesmanship — Suggestion,  the 
potent  force  underlying  advertising — We  do  not  habit- 
ually use  our  reason  in  buying — Sales  methods  aim  to 
(i)  Attract  attention,  (2)  Awaken  interest,  (3)  Create 
desire,  (4)  Move  the  will — We  buy  what  we  are  told  to 
buy — Expenditures  for  persuasive  selling — ^The  nuisance 
of  bill  board  advertising. 
Wisest  choice  impossible  under  the  aggressive  selling  system — 
(i)  Causes  false  estimate  of  things — (2)  The  consumer 
caused  to  buy  unwisely — Artificial  creation  of  new  de- 
mand— Our  habits  are  changed  by  advertising — Where 
advertising  leaves  off,  salesmanship  begins — .\ntagonistic 
interests  of  seller  and  buyer — The  consumer  should  de- 
mand service  for  the  money  he  spends. 

CHAPTER  II 

Adulteration  and  Short  Measure 24 

Extent  of  the  impure  food  evil — Federal  law  and  its  opera- 
tion— No  law  can  reach  the  subtler  forms  of  food  debase- 
ment— Local  regulation  valuable  but  thorough  inspection 


CONTENTS 

PAG9 


hopeless — A  market  inspector's  instructions — Our  dis- 
tributive system  the  root  of  the  trouble — Competition  far 
from  removing  the  difficulty — The  poor  suffer  most  from 
the  impure  food,  short  weight  evils — Anti-social  position 
of  the  private  dealer. 


CHAPTER  III 

The  Expensive  Middleman 38 

What  distribution  includes — Importance  of  the  problem — The 
high  cost  of  distribution — Possibilities  of  savings — Gro- 
cers* cost  of  doing  business — Mere  number  of  middlemen 
not  important — The  test  of  costly  service  is  to  give  same 
service  for  less  money — Lack  of  proper  grading — Costly, 
unproductive  selling  performed  over  and  over — Competi- 
tion fails  when  most  needed — The  cold  storage  warehouse 
— Package  vs.  bulk  goods — Advertising  does  not  always 
increase  the  cost  to  the  consumer — Sales  pushing,  not 
packaging,  costs — The  consumer  must  bear  the  cost  of 
competition — Unorganized  consumers  no  match  for  or- 
ganized producers. 
The  wholesaler  and  jobber — Wholesaler  to  some  extent  elimi- 
nated. 
The  chaos  of  retailing — ^Wasteful  duplication  of  stores — In- 
eflScient  distribution  of  ice  and  milk — "  PubHc  Markets  " — • 
Mail  order  houses — Chain  stores — Not  profits  of  middle- 
men so  much  as  actual  wastes  should  be  saved  to  con- 
sumers. 


CHAPTER  IV 

The  Social  Cost  of  the  Competitive  Dealer 65 

Some  of  the  evils — Concentration  of  wealth — Discouragement 
of  thrift — Profit-competition  system  makes  for  antagonism 
between  dealers  and  between  dealers  and  customers — 
Influence  on  the  shopper — Influence  on  dealers  and  clerks 
— Increasing  combination  of  dealers  only  intensifies  con- 
flict between  dealer  and  consumer — Our  economic  environ- 
ment profoundly  influences  us. 


CONTENTS  XI 

PART  11.    REASONS  AND  THE  REMEDY 
CHAPTER  V 

PAGE 

The  Hope  of  the  Consumer 

Growing  distrust  of  competition— Evils  of  distribution  due  to     77 
system  of  competition  for  profit. 

The  fundamental  remedy — A  consumer-owned  system  the 
only  cure — The  co-operative  plan  in  brief — Removes  the 
cause  of  the  evil. 

Co-operation  facilitates  wiser  selection. 

Overcomes  the  impure  food,  short  weight  evils. 

How  co-operation  reduces  costs — Dealer  lives  by  concealed 
profits  at  the  expense  of  producer  and  consumer — Co- 
operation shortens  the  route  from  producer  to  consumer — 
Extent  of  savings— Co-operation  the  shortest  route 
possible — Savings  of  efficiency  go  to  consumers. 

CHAPTER  VI 

The  Rochdale  Plan 88 

The  Rochdale  plan— Capital  is  paid  wages— Workingman  may 
finance  himself  as  a  consumer  if  not  as  a  producer — "One 
man  one  vote"  assures  democratic  control — Why  divi- 
dends on  purchases  were  adopted  rather  than  cut  prices — 
Cash  only — The  second  step— Wholesale  societies— Roch- 
dale organization  adapted  to  various  kinds  of  enterprises — 
Store  service  simple  or  elaborate. 

CHAPTER  Vn 

The  Passing  of  Competition 9S 

Waste  of  competition  in  retailing— Economy  of  large  plant 
distribution — How  can  needless  stores  be  eliminated? — 
Publication  of  food  budget  prices — The  ideal  food  dis- 
tributor— How  can  co-operation  cure  the  evils  of  competi- 
tion— Reasons  for  faith  in  the  ultimate  success  of  co- 
operation—The well-established  co-operative  competes 
successfully  with  the  profit  store — Intangible  benefits  pos- 
sible through  co-operation — Influence  on  store  help — 
Growth  of  social-mindedness  as  a  motive  in  business. 


XU  CONTENTS 

CHAPTER  VIII 

PAGE 

Salesmanship  and  Co-operation 105 

Buyer's  difficulty  is  one  of  selection — Wise  choice  hindered  by 
aggressive  selling  system — Advertising  and  selling  under 
the  co-operative  system — Twofold  quest  of  the  shopper — 
The  pull  of  the  consumer  substituted  for  the  push  for 
profits — Ordinary  salesmanship  vs.  work  of  a  co-operative 
store  salesman — Goods  should  be  described  appetizingly, 
but  not  extravagantly — True  function  of  advertising — 
Spirit  of  "co-operative"  advertising — Reasons  for  its  low 
cost. 

CHAPTER  DC 

The  Debits  of  Credit 113 

Three  classes  of  credit  customers — Credit  deahng  expensive 
and  unjust — Deposit  account  system. 

CHAPTER  X 

Higher  Gains  and  Human  Values 117 

British  emphasis  on  the  social  and  ethical  gains — ^A  just  dis- 
tributive system — By-products  of  co-operation — Co- 
operative buying  is  organized  economy — The  social  gain  in 
an  increased  spending  power  for  the  many — Co-operation 
tends  to  remove  emphasis  from  material  things — Producer 
may  expect  fairer  prices  for  his  goods — Beneficent  effect 
of  co-operation  on  store  workers — Superfluous  store- 
keepers turned  into  producers — Advantages  to  society  as  a 
whole — Co-operation  an  effective  way  of  fighting  the 
trusts — Utilization  of  the  "over-supply" — Co-operation, 
a  training  for  citizenship — Co-operators  may  insist  on 
good  labor  and  sanitary  conditions — The  administrative 
and  business  training  co-operation  gives  to  thousands — 
Co-operation  has  always  dealt  with  women  as  the  equals 
of  men — The  International  spirit  in  co-operation — Co- 
operation gives  social  vision — Taxes  on  wealth  and  profit- 
sharing  only  modified  capitalism — Socialism,  syndicalism 
and  the  single  tax  organize  men  as  producers — Helplessness 
of  the  unorganized  consumer — Consumers'  co-operation 
and  producers'  co-operation — No  social  revolution  nor 
violence  needed  to  adopt  co-operation — Summary. 


CONTENTS  Xm 

PART  III.    PRACTICAL  CO-OPERATION 
CHAPTER  XI 

PAGE 

Awakening  the  Consumer i43 

Stability  of  the  co-operative  idea— Success  depends  ultimately 
on  the  consumers— Importance  of  educational  work — 
Co-operation  a  creed— No  flashy  immediate  returns — 
British  belief  in  the  importance  of  education— Ideal  ad- 
vantages to  be  sought  first — The  educational  committee — 
Practical  necessity  of  propaganda— A  definite  program 
desirable — Learning  to  "think  co-operatively  "—Co- 
operative buying  is  automatic  social  welfare — The  co- 
operator  must:  see  the  cause  and  believe  in  the  cure — 
Loyalty  to  the  majority's  will  a  stern  proof  of  democracy — 
Frankness  and  helpfulness. 

CHAPTER  XII 

Enlisting  and  Developing  Store  Workers 153 

Can  co-operation  attract  the  right  sort  of  workers? — It  can 
ofifer  fair  salary — Plus  large  opportunity  for  constructive 
service — Workers  should  begin  young  and  receive  careful 
training — Compensation— Bonus  system  in  some  English 
stores — Training  workers — Subjects  for  study — In  co- 
operative principles — Training  in  store  routine — Need  of 
system  in  store  work — Training  under  the  direction  of 
manager  and  educational  committee — Careful  training  of 
store  workers  in  England — Staff  meetings  and  their  use — 
As  elsewhere,  real  interest  in  the  work  is  the  most  produc- 
tive motive. 
The  manager — Directors  should  place  manager  in  authority  so 
as  to  hold  him  responsible. 

CHAPTER  XIII 

When  and  Where  to  Start 163 

Object  of  Part  III:— When  and  where  to  start— The  right 
group — The  common  need — Guess  work  should  not  be 
relied  upon — "Fair-weather  co-operators" — Conditions 
determine  the  type  of  store  to  start— Why  will  a  co- 
operative store  not  succeed  anywhere? 


XIV  CONTENTS 

CHAPTER  XIV 

PAGE 

Buying  Clubs 169 

Two  kinds  of  clubs — Club  members  must  realize  difference 
between  club  and  dealer — Consumers  must  do  without  cer- 
tain services  or  pay  for  them — Co-operative  league — Low 
possible  expense  of  buying  club — Club  should  get  onto  a 
Rochdale  basis  as  soon  as  possible — Importance  of  cash 
trading  only — Special  discount  arrangements  with  dealers 
can  often  be  made — The  buying  club  a  good  school  for  co- 
operation. 

CHAPTER  XV 

Planning  a  Co-operative  Society 176 

Better  wait  till  manager  is  in  sight — How  many  co-operating 
members? — How  much  will  each  buy? — Arrangement  of 
capital — Stock  dividends  equal  to  interest  rate  in  com- 
munity— Do  not  hold  out  false  hopes— Legal  side  of  or- 
ganizing— Directors — Danger  of  departing  from  Rochdale 
principles — Dividend  on  purchases — Purchase  dividends 
to  non-members — Keeping  members  constantly  in  touch 
with  store  finances — Relations  of  board  and  management 
— Working  out  store  problems  an  interesting  task. 


CHAPTER  XVI 

Starting  and  Running  a  Store 183 

Store  purpose  to  be  kept  in  mind — Danger  of  compromises — 
Location  of  store — Ultimate  economy  to  be  considered — • 
Convenience  of  handling — Necessity  of  careful  planning — 
Buying — Not  easy  to  avoid  paying  the  wholesaler — Buy- 
ing of  original  sources — Pricing  of  goods — In  terms  of 
costs  and  earnings — Literature  on  store  management. 


CHAPTER  XVn 

The  Delivery  Problem 190 

Movement  toward  no  delivery — Evils  of  "free"  delivery — 
The  remedy:  Charge-for-delivery  plan — Reasons  for 
uniform   charge — Charge   for   delivery   encourages   sys- 


CONTENTS  XV 

PACE 

tematic  ordering  and  store  economy — In  harmony  with 
co-operative  principles — Joint  delivery — Delivery  vehicles 
— Quick  calls — Appearance  and  courtesy. 

CHAPTER  XVIII 

Handling  Traded-Marked  Goods 197 

Evolution  of  packaged  goods— Shall  producer  divide  his  profits 
with  the  consumer? — Added  cost  of  packaged  and  adver- 
tised goods — Co-operative  store  can  select,  O.  K.  and 
package  its  goods  at  net  cost — Co-operative's  policy  on  all 
staple  articles:  test,  package  and  0.  K. 

CHAPTER  XIX 

CO-OPERATR'E  ADVERTISING  AND  SALESMANSHIP 202 

Meeting  the  consumer's  need  for  information — Means  of  con- 
veying information — Function  of  general  advertising — 
Scope  of  store  advertising— "Selling"  the  store — Prices 
should  be  given  freely — Circulars— Store  cards  and  signs — 
Store  salesmanship — Advertising  and  salesmanship  should 
overlap  as  little  as  possible — Importance  of  expeditious 
handling — Salesman  should  get  a  vivid  sense  of  the  sig- 
nificance of  the  movement  and  of  his  part  in  it. 

PART  IV.    BACKGROUND  AND  OUTLOOK 

CHAPTER  XX 

Europe  and  Beyond — A  Story  of  Peaceful  Conquest 215 

The  course  of  the  co-operative  movement — Robert  Owen  "the 
Father  of  Co-operation" — The  Rochdale  idea — "Th' 
Owd  Weyvur's  Shop" — The  long,  hard  pull — Growth  and 
extension — The  Christian  Socialists — The  establishment 
of  a  co-operative  wholesale — The  marvelous  productivity 
of  the  C.  W.  S.— The  Scottish  Co-operative  Wholesale— 
"A  state  within  a  state." 

CHAPTER  XXI 

Europe  and  Beyond— A  Story  of  Peaceful  Conquest  (Con- 
tinued)     229 

Co-operative  distribution  in  Gcrnu;py— Co-operative  credit  in 


XVI  CONTENTS 

PAGB 
Germany,  the  Raiffeisen  Banks — ^The  Schulze — Delitzsch 
banks — The  extent  of  co-operation  in  Germany — Co- 
operation in  Russia — Co-operative  production  and  agricul- 
ture in  France — Co-operative  stores  in  France — Effect  of 
the  great  war — Belgium — Co-operation  in  Belgium  during 
the  war — Switzerland — Denmark  and  agricultural  co- 
operation—Ireland— Sweden. 

CHAPTER  XXII 

Place  and  Progress  of  Co-operative  Production 257 

Purpose  of  co-operative  production — Producers'  societies  or- 
ganized much  like  Rochdale  consumer  societies — Ad- 
vantages of  shipping  associations — Consumer  societies 
should  meet  producers'  societies  half  way — Troubles  of 
producers'  societies  correspond  to  those  of  consumers' 
societies — Producers'  society  contrasted  with  consumer's 
society /or  the  purpose  of  production — Consumers  would  do 
well  at  present  to  co-operate  with  the  producers'  societies 
in  fields  where  such  exist. 

CHAPTER  XXIII 

The  Prospect  for  Co-operation  of  Consumers  in  America  . . .  264 
Approval  of  co-operative  theory  very  general — Distrust  of  the 
practicability  of  co-operation — Present  extent  of  consumer 
co-operation  in  this  country — The  outlook — Conditions  of 
success — Large  co-operative  enterprises  in  force  in  America 
— Americans  should  be  able  to  act  together  as  consumers — 
Co-operative  plan  has  been  proved  out  piecemeal — Rea- 
sons why  co-operation  cannot  succeed  wholly  inadequate — 
How  will  American  consumer  co-operation  be  developed? 

CHAPTER  XXIV 

For  A  Strong  Consumers' Movement  in  America 272 

What  must  be  done  to  plant  co-operation  in  American  soil — 

Savings  not  mainly  from  dealer's  profits. 
Steps   toward   consumer   societies — Developing   co-operative 
spirit — Developing  new  distributive  agencies. 


CONTENTS  XVll 

PAGE 

A  building  plan  proposed— Objects  to  be  sought— The  plan- 
Establishment  of  local  units— Sales  of  each  unit  pooled 
separately— Functions  of  local  stores— Work  of  general 
company — A  safe  beginning — Plan  of  work  to  be  agreed 
upon  beforehand— This  plan  avoids  common  pitfalls. 

APPENDICES 

APPENDIX  I 

Status  and  Outlook  of  Co-operative  Buying  in  Different 

Sections  of  North  America 283 

A.  How  it  looks  in  Canada:  George  Keen,  Honorary  Secretary 

Co-operative  Union  of  Canada 283 

B.  Consumer  co-operation  in  California:  Ernest  O.  F.  Ames, 

President  Pacific  Co-operative  League 286 

C.  The  New  Orleans  Undertaking:  N.  O.  Nelson 292 

D.  Around  Pittsburgh 293 

E.  Among  the  Illinois  Miners 293 

F.  The  movement  in  the  North  Western  States:  E.M.Tousley.  294 

APPENDIX  II 

Sample  Documents 301 

A.  Wisconsin  Co-operative  Law 301 

B.  Certificate  of  Incorporation 306 

C.  By-Laws 308 

Index. 3^9 


INTRODUCTION 

Mr.  Harris  could  have  chosen  no  happier  moment  for 
his  message  than  the  present.  The  form  of  co-operation 
for  which  he  pleads  has  never  appealed  with  any  real  force 
to  the  American  business  sense;  its  savings  seemed  too 
insignificant,  its  range  too  narrow  and  its  management 
too  insecure. 

The  consumer  has  been  "the  forgotten  man."  From 
big  business  down  to  obscure  quackeries  he  has  been  fleeced 
almost  without  protest.  Into  this  conspiracy  of  ignorance, 
wastefulness  and  sharp  practices,  the  shock  of  war  has 
come.  The  awakening  is  rude  but  the  consumer  has  got 
the  stage.  Already  millions  of  us  are  looking  back  wonder- 
ing at  the  slavish  acquiescence  with  which  we  took  our 
punislunent.  We  are  most  amazed  perhaps  that  we  should 
have  submitted  to  methods  of  secrecy  which  have  been  as 
mischievous  in  business  as  in  diplomacy. 

The  world's  outcry  against  "organized  lying"  between 
nations  is  seen  to  apply  as  aptly  to  these  hidden  practices 
in  business. 

To  the  awful  vibrations  of  war  we  owe  it  that  the  con- 
sumer public  is,  in  this  respect,  coming  to  its  rights.  The 
consumer  will  never  again  be  so  easy  a  dupe.  It  is  not  only 
governments,  but  the  most  masterful  business  men  that 
now  become  our  instructors.  One  of  them  has  just  said 
in  Washington,  "The  public  has  a  right  to  know  the  real 
facts  about  its  purchases."  From  the  start  this  has  been 
the  contention  of  the  Consumers'  League. 

Mr.  Harris  is  wise  in  lading  such  emphasis  on  these 
points  and  doing  it  through  clear  and  concrete  illustrations. 

The  Foreword  in  the  present  volume  shows  his  admirable 
equipment  for  his  task.  To  have  long  and  successful 
business  training  together  with  a  singularly  open  mind  is 


XX  INTRODUCTION 

a  preparation  extremely  rare  among  writers  on  co-operation 
in  this  country. 

If  we  add  to  the  modest  estimate  in  the  Foreword  the 
author's  years  of  experience  with  a  co-operative  store,  the 
reader  is  freed  at  once  from  all  fear  that  he  is  to  have  an- 
other sentimental  handling  of  this  subject. 

The  study  is  enriched  by  the  author's  knowledge  of  the 
English  movement  and  its  immense  progress  since  1914. 
We  are  kept  consistently  to  the  point  of  view  which  avoids 
the  foggy  intermixture  of  business  ventures  called  co- 
operation but  which  in  no  sense  deserve  the  title.  It  will 
mark  a  new  and  hopeful  stage  to  have  what  is  clearly  and 
distinctly  a  consumers'  movement  marked  off  and  con- 
sidered on  its  own  merits. 

We  shall  be  more  indebted  to  the  author  for  his  fearless 
acceptance  of  social  utility  rather  than  private  profit  as  the 
first  and  leading  motive  in  wealth-production.  To  turn 
that  thought  into  a  national  habit  would  go  far  to  recom- 
pense us  for  the  devastations  of  the  war. 

To  work  consciously  for  service  and  for  use  is  the  highest, 
as  it  is  the  most  inspiring  aim  of  the  consumers'  movement. 

John  Graham  Brooks. 
Cambridge,  Mass. 


SYNOPSIS 

With  our  present  system  of  transferring  goods  from  the 
producer  to  the  consumer  there  is  very  general  dissatis- 
faction, and  with  the  rapid  loss  of  confidence  in  competi- 
tion as  a  means  of  protection  to  consumer  or  producer  the 
discontent  with  the  workings  of  the  system  increases. 

This  book  points  out  the  chief  evils  and  faults  of  present 
distribution,  locates  the  fundamental  cause,  indicates  a 
remedy,  tells  why  it  will  work,  how  to  apply  it,  and  gives 
some  evidence  that  it  will  work. 

In  the  first  part  the  system  is  indicted  on  four  counts. 
First,  it  is  claimed  that,  through  aggressive  selling  methods, 
including  advertising  and  salesmanship,  goods  are  forced 
upon  the  consumer  to  his  detriment,  and  that  while  he  is 
charged  some  two  billions  of  dollars  for  pushing  goods  upon 
himself  and  then  made  to  pay  for  needless  purchases, — 
he  is  not,  under  present  practice,  afforded  adequate  facili- 
ties for  making  wise  choice. 

Second,  the  present  system  brings  such  constant  pressure 
upon  the  dealer  to  induce  him  to  debase  goods  and  give 
short  measure  that  no  amount  of  regulative  laws  and 
supervision  will  suffice  adequately  to  protect  the  consumer 
from  frauds  by  which  he  is  now  the  loser  by  hundreds  of 
millions  per  year,  a  loss  which  falls  most  heavily  upon 
those  least  able  to  bear  it. 

In  the  third  place,  it  is  pointed  out  that  under  present 
mercantile  distribution  certain  expenses  are  incurred  which 
the  consumer  must  bear,  but  which  do  not  procure  him 
any  useful  service,  and  that  the  system  is  so  organized  that 
there  is  no  proper  incentive  to  eliminate  these  and  other 
needless  expenses.  This  makes  the  system  excessively 
costly  to  the  consumer. 

It  is  shown  that  the  relationship  between  dealer  and 


XXU  SYNOPSIS 

dealer,  and  between  dealers  and  consumer  are  such  as  to 
produce  certain  anti-moral,  anti-social  and  anti-economic 
results. 

In  the  second  part  of  the  book  it  is  urged  that  all  these 
evils  of  the  present  distributive  system  are  due  to  one  funda- 
mental cause:  namely,  the  competition  for  profit  which 
motives  and  propels  the  machinery  of  distribution.  The 
position  is  taken  that,  by  reason  of  this  motive,  the  evils 
of  the  present  system  are  not  merely  abuses  but  are  in- 
herent in  the  system,  and  that  only  the  removal  of  the  profit 
motive  can  lead  to  a  thorough-going  remedy.  The  efifort 
is  made  to  show  how  and  why  co-operative  buying  fur- 
nishes the  radical  remedy. 

In  Part  III  directions  are  given  and  suggestions  made 
for  the  application  of  the  remedy,  namely,  Rochdale  co- 
operative buying. 

The  fourth  part  is  devoted  to  an  account  of  the  Rochdale 
plan  as  it  has  proven  out  in  Europe,  discussion  of  the  indi- 
cations that  the  plan  can  be  successfully  applied  here, 
together  with  suggestions  as  to  how  a  substantial  co-opera- 
tive buying  movement  may  be  launched  and  promoted  in 
this  country. 


PART  I 
THE  FAILURE  OF  OUR  MIDDLEMANISM 


CO-OPERATION  THE  HOPE  OF  THE 
CONSUMER 

CHAPTER  I 

ADVERTISING   AND   SALESMANSHIP  VS.  THE 
CONSUMER 

"Why  spend  ye  money  for  that  which  is  not  bread  and  your 
labor  for  that  which  satisfieth  not?" — Isaiah,  55:2. 

Wherein  and  how  far  does  the  present  system  of  dis- 
tributing commodities  meet  the  requirements  of  an  ideal 
system,  judged  by  its  service  to  the  individual  and  its  in- 
fluence upon  society?  For  the  purposes  of  this  work  it  is 
necessary  to  make  a  broader  inquiry  into  the  workings  of 
our  present  system  than  most  writers  undertake. 

To  begin  with,  the  individual  in  whose  behalf  this  study 
is  made  must  be  treated  not  merely  as  a  con-  Man  a  bundle 
sumer,  but  also  as  a  man.  From  his  first  mo-  °^  ^*"ts 
ment  of  life  he  is  a  bundle  of  vague  wants,  each  seeking  to 
become  conscious  and  get  satisfaction.  Within  this  growing 
multitude  of  desires,  a  smaller  and  smaller  proportion  suc- 
ceed in  coming  to  the  top,  and  fewer  still  will  be  satisfied. 
Which  particular  wants  are  given  a  hearing  and  encouraged 
and  which  are  to  be  suppressed  is  the  most  important 
question  in  the  man's  hfe;  upon  his  choices— a  long  series 
extending  throughout  the  span  of  his  life — development 
and  character  depend. 

Now  it  is  essential  that  the  individual  study  himself  and 
the  world  in  order  to  learn  to  guide  and  govern  the  stirrings 
\vithin  and  the  stimuli  mthout. 


4  CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

To  this  end  he  is  exposed  to  the  influences  of  home  and 
Education  to  school  training  through  a  prolonged  childhood 
help  him  and  youth,  and  to  the  church  and  other  institu- 
c  oose  wise  y  ^-j^j^g  q^^^^  factors  which  make  for  enlightenment 
and  uplift.  Society  aims  so  to  fortify  the  individual  with 
a  wealth  of  information  and  varied  interests  that  he  can 
make  his  choices  with  skill  and  intelligence. 

I  take  it  that  the  individual  seeks  in  life  the  largest  pos- 
sible total  of  satisfactions.  He  seeks  not  only  to  gratify 
existing  wants  but  to  acquire  new  wants,  the  gratification 
of  which  will  make  for  ever  wider,  deeper  and  fuller  Uf e.  Per- 
haps the  most  important  problem  in  life  is  to  know  what 
wants  to  seek  to  gratify,  what  ones  to  deny,  and  in  what  di- 
rection to  seek  to  stimulate  new  wants.  Some  of  man's  wants 
are  physical,  some  intellectual  and  some  spiritual.  Un- 
doubtedly the  interests  of  the  individual  depend  upon  be- 
ing freely  allowed  to  develop  in  the  direction  of  his  highest 
good.  And  in  this  he  should  not  be  unnecessarily  hampered 
or  swayed. 

A  minimum  of  food,  clothing  and  shelter  is  imperative 
if  one  is  to  exist.  Beyond  this  necessary  minimum — and 
this  is  smaller  than  most  of  us  realize  and  could  be  materi- 
ally reduced  in  cost  by  wiser  selection — comes  the  great 
realm  of  choice.  The  absolute  essentials  to  the  mainte- 
nance of  health  and  strength  should  be  bought  for  an  amount 
which  is  within  the  earnings  of  about  the  lowest  paid  classes 
in  the  United  States. 

Beyond  the  provision  of  this  minimum  it  rests  with  the 
individual  to  decide  in  what  direction  he  will  seek  the 
gratification  of  existing  wants  and  the  development  of  new 
ones.  In  the  "pursuit  of  happiness"  one  may  prefer  idle- 
ness, another  sport,  another  science,  another  history, 
another  art,  another  music,  others  may  seek  contact  with 
nature,  and  still  others  seek  to  study  and  develop  their 
relations  to  their  fellows  or  to  the  Infinite. 

Some  people  will  seek  satisfactions  which  have  to  be 
produced  by  labor.  Some  will  thus  look  exclusively  to 
things  for  their  satisfaction  while  others  will  not.    Many  of 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  5 

US  SO  order  our  lives,  or  at  least  live  lives,  that  consist 
wholly  of  producing  or  earning  things  and  then  comsuming 
them.  Our  whole  time  is  given  either  to  getting  things  or 
to  using  them.  As  we  have  seen,  we  seek  life  through  two 
channels:  that  of  the  consumption  of  commodities  obtained 
by  purchase,  and  that  of  the  enjoyment  of  good  things  un- 
related to  money  value — emotional,  intellectual  and  spirit- 
ual benefits.  An  ideal  system  of  bringing  purchasable 
commodities  to  us  would  so  enlighten  us  about  them  as  to 
enable  us  to  choose  wisely  what  to  buy,  and  would  do  so 
without  unduly  magnifying  their  importance  as  against 
those  goods  which  may  be  obtained  irrespective  of  one's 
spending  power. 

In  view  of  the  importance  of  acting  wisely  it  is  well  to 
inquire  what  external  influences  help  to  mould  these  deci- 
sions and  whether  any  of  these  are  adverse  to  the  well-being 
of  the  individual. 

The  individual  is  guided  largely  by  the  customs  of  the 
time  and  society  into  which  he  is  born.  How  far  do  any 
of  the  institutions  through  which  he  lives  conduce  to  "high 
thinking  and  plain  living,"  or  the  reverse?  Shall  undue 
heed  be  given  to  material  wants  at  the  expense  of  the  in- 
tellectual and  spiritual?  Shall  it  be  true  that  ^'things  are 
in  the  saddle"?  Or  shall  a  man  "see  life  steadily  and  see 
it  whole"? 

Specifically,  what  influences  are  exercised  over  the  action 
and  so  over  the  life  of  the  individual  by  the  present  system 
of  commodity  distribution? 

In  the  last  fifty  years  there  has  grown  up,  notably  in 
the  United  States,  a  system  of  distribution  which,  in  my 
opinion,   is   calculated   to   influence   and   does  Adverse  in- 
influence  the  ideals  and  habits  of  the  people  present  sys- 
very  profoundly.     This  system  does  not  con-  tem 
fine  its  functions  to  furnishing  what  it  is  found  that  the 
consumer  wants,  but  exerts  a  subtle  but  powerful  and  far- 
reaching  influence  in  determining  what  the  consmner  shall 
want  and  what  he  shall  buy. 

In  the  days  of  hand  production  our  grandparents  sought 


6  CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

the  producer  to  obtain  that  which  would  satisfy  their 
simple  wants.  Now  the  producer,  through  advertising 
and  other  persuasive  salesmanship,  pursues  the  consumer 
so  actively  that  the  consumer  has  become  relatively  pas- 
sive or  is  even  on  the  defensive.  The  consumer  does  not. 
Consumer  on  as  of  old,  of  his  own  initiative  go  to  buy;  he 
the  defensive  merely  conscnts  to  buy  when  he  is  importuned 
to  do  so.  This  pressure  is  appHed  by  scientific  means  and 
with  tangible  results  discussed  later.  ^ 

So  it  has  come  to  pass  that,  in  spite  of  society's  effort  to 
encourage  and  educate  our  power  to  make  independent 
choices,  whether  we  will  spend  our  money  or  not  and  what 
we  will  spend  it  for  depends  largely  upon  the  will  of  the 
producers  and  distributors  of  commodities  by  whom  we 
are  assailed.  We  consumers  are  about  as  unconscious  of 
this  influence  as  we  are  of  increased  pressure  of  the  atmos- 
phere when  we  descend  from  the  mountain  to  the  valley, 
but  the  facts  are  fully  demonstrated  by  figures. 

I  claim  that,  through  this  influence  of  aggressive  mar- 
keting, consumers  are  caused  to  buy  when  they  should 
not  spend  their  money;  are  caused  to  buy  wrong  things  in- 
stead of  things  suited  to  their  needs;  are  distracted  from 
choosing  wisely  and  are  afforded  insufficient  facilities  to 
aid  in  wise  selection. 

Persuasive  Salesmanship 

How  does  the  producer's  distributor  cause  people  to  buy? 
By  a  study  of  the  laws  which  govern  the  human  mind 
Subtle  methods  have  been  evolved  whereby,  through 

mocUirn^s^es-  ^^^  ^^^  ^^  advertising  and  other  forms  of  sales- 
manship manship,  the  consumer's  undefined  wants  may 
be  fanned  into  specific  desires.    Seizing  upon  one  of  these 

"  1  As  things  are  at  present  the  manner  in  which  we  spend  our 
money  is  a  matter  in  which  we  are  swayed  less  by  intelligence  than  by 
habit  and  convention  and  sheep-like  mimicry  of  one  another,  tempted 
by  weak-minded  submission  to  the  bullying  of  the  adviser." — Hartley 
Withers:  Poverty  and  Waste,  page  149. 


ADVERTISING,   SALESMANSHIP,   VS.    CONSUMER  7 

vague,  restless  yearnings,  the  producer's  distributor  de- 
velops it  into  active  commercial  demand  for  his  product; 
and  a  large  enough  percentage  of  the  public  responds  to 
make  the  process  decidedly  profitable. 

To  illustrate:  The  maker  of  a  talking  machine  plans  and 
carries  out  a  campaign  of  advertising  and  salesmanship 
covering  some  years.  The  result  is  that  enough  people  all 
over  the  country  have  developed  within  them  a  strong 
enough  desire  for  a  talking  machine  to  cause  them  to  buy, 
so  that  large  additional  works  have  to  be  built  to  supply 
the  demand  thus  created.  The  same  thing  is  done  by  the 
maker  of  an  automobile,  a  cigarette,  a  piano  player,  or  a 
certain  brand  of  whiskey. 

In  creating  demand  some  interesting  principles  of  psy- 
chology are  taken  advantage  of.  For  instance,  when  a 
certain  article  is  repeatedly  brought  before  the  mind  and 
reasons  for  buying  it  are  given,  the  reader  tends  to  act  as 
he  is  urged  to  do.  Even  the  command  to  "Drink  so  and 
so"  the  reader  tends  to  act  upon  unless  he  consciously 
combats  the  suggestion.  "Every  normal  individual," 
says  Prof.  Walter  Dill  Scott, ^  "is  subject  to  suggestion 
the  influence  of  suggestion.  Every  idea  of  |he  potent 
wliich  we  think  is  all  too  Kable  to  be  held  for  lymg  adver-' 
truth,  and  every  thought  of  an  action  which  ^^"^s 
enters  our  minds  is  hkely  to  result  in  such  action.  .  .  . 
The  very  thought  of  walking  will  inevitably  lead  to  the 
act  unless  I  stop  the  process  by  the  thought  of  standing 
still.  .  .  .  Thought  is  dynamic  in  its  very  nature  and 
every  idea  of  an  action  tends  to  produce  that  action." 

How  many  of  us  are  aware  that  the  bill  board  display 
advertisement  or  street  car  card  are  acting  upon  us  and 
that,  in  a  considerably  proportion  of  cases,  we  are  to  act 
in  turn,  buy  the  article  advertised  and  become  one  of  the 
thousands  to  justify  the  advertiser  and  return  him  a  profit. 

"The  actual  effect  of  modern  advertising  is  not  so  much 
to  convince  as  to  suggest.  .  .  .  The  individual  swallowed 
up  by  a  crowd  is  not  aware  of  the  fact  that  he  is  not  exer- 
'  Walter  Dill  Scott:  Psychology  oj  Advertising,  pages  82-3. 


8  CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

cising  a  normal  amount  of  deliberation.  His  actions  appear 
to  him  to  be  the  result  of  reason,  although  the  idea  as  pre- 
sented is  not  criticised  at  all  and  no  contradictory  or  in- 
hibiting idea  has  any  possibility  of  arising  in  his  mind. 
In  the  same  way  we  tliink  that  we  are  performing  a  de- 
liberate act  when  we  purchase  an  advertised  commodity, 
while  in  fact  we  may  never  have  dehberated  upon  the 
subject  at  all.  The  idea  is  suggested  by  the  advertisement 
and  the  impulsiveness  of  human  nature  enforces  the  sug- 
gested idea,  hence  the  desired  result  follows  in  a  way  un- 
known to  the  purchaser."  ^ 

Now,  some  of  us  would  be  disposed  to  deny  the  state- 
ment that  we  do  not  habitually  use  our  reason  in  buying, 
We  do  not  but  the  Statistics  of  advertising  returns  are 
5u?'reSon"i^  against  us.  On  this  point  Scott  says:  "Sugges- 
buying  tion  is  of  Universal  application  to  all  persons, 

while  reason  is  a  process  which  is  exceptional  even  among 
the  wisest.  We  reason  rarely,  but  act  under  suggestion 
constantly.  .  .  .  Every  idea  of  a  function  tends  to  call 
that  function  into  activity,  and  will  do  so  unless  hindered 
by  a  competing  idea  or  physical  impediment.  .  .  .  The 
command  reheves  the  one  commanded  of  the  trouble 
of  making  up  his  mind.  It  makes  up  his  mind  for  him 
and  so  makes  action  easy."  Nor  does  a  short  memory 
shield  the  consumer,  for  "to  say  that  an  advertisement 
is  forgotten  is  not  equivalent  to  saying  that  it  has  not 
made  a  lasting  impression.  If  I  should  glance  at  the 
same  advertisement  in  different  magazines  for  a  number 
of  years,  it  is  quite  possible  that  these  single  glances 
would  be  forgotten.  I  might  not  remember  even  having 
seen  an  advertisement,  and  yet  my  familiarity  with  the 
goods  advertised  might  seem  so  great  that  I  should  beHeve 
that  some  of  my  acquaintances  had  recommended  them 
to  me  and  that  I  had  used  the  goods  years  before."  ^ 

1  Walter  Dill  Scott:  Psychology  of  Advertising,  page  103. 

2  In  his  work  Advertising  and  Selling,  Prof.  H.  L.  Hollingsworth 
of  Columbia  University  treats  the  same  subject  in  a  similar  way  under 
such  headings  as:  "Catching  the  Attention,"  "Holding  the  Atten- 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  9 

Further,  to  show  the  scientific  manner  in  which  it  is 
sought  to  influence  the  mind  of  the  reader,  the  late  Prof. 
Hugo  Munsterburg,  writing  in  Printer's  Ink,  cautions  ad- 
vertisers against  permitting  any  distraction  of  the  mind. 
He  even  discourages  pretty  pictures  in  advertisements  on 
these  interesting  grounds: 

"If  we  are  really  enjoying  beauty  we  are  cut  off  from 
the  world  of  action,  we  are  perfectly  satisfied  with  the 
beautiful  sight.  The  two  inner  settings,  the  practical  one 
which  the  skilled  advertiser  wants  to  force  on  us,  and  the 
esthetic  one  which  the  painter  awakes  must  oppose  each 
other.  The  one  stirs  up  our  wishes  and  the  other  brings 
all  wishes  to  silence. 

"If  the  row  of  good  teeth  is  really  to  recommend  the 
tooth-powder,  the  picture  of  the  woman  whose  smile 
shows  them  must  not  fascinate  us  like  a  perfect  painted 
portrait.  The  esthetic  element  in  advertising  must  re- 
main entirely  subordinated  to  the  practical  aim  or  it  will 
interfere  with  its  efficiency."  Is  not  the  implication  here 
rather  plain  that  modern  selling  machinery  aims  to  inhibit 
the  consumer's  power  of  free  choice,  to  put  to  sleep  all 
parts  of  him  except  his  desire  to  buy? 

The  purpose  of  advertising  and  salesman-  Sales  methods 
ship   is   set   forth   in    the   following   program:  f?i° 
First,    attract   the   consumer's   attention;   sec-  attention 
ond,    awaken    his   interest;    third,    create    de-  Se^elf^^° 
sire;   and,    fourth,   move   to   action.     Appeal  (3). Create 
first    to    the   perceptive   faculties,    second,    to  f4f  Move  the 
the  intellect;  third,  to  the  emotion;  and  fourth,  wUi 
to  the  will. 

How  much  of  this  work  upon  the  consumer  the  adver- 
tisement shall  do  depends  upon  many  things.  But  wher- 
ever advertising  leaves  oflf,  personal  salesmanship  with  all 
its  training,  devices  and  accessories  takes  up  the  work. 
And,  says  the  Christian  Register,  "for  the  trained  modern 
salesman  with  all  his  art  the  consumer  is  no  match." 
tion,"  "Fixing  the  Impression,"  "Laws  of  Suggestion,"  "Provoking 
the  Response." 


lO  CO-OPERATION   THE  HOPE   OF  THE  CONSUMER 

Let  US  see  what  a  well-known  and  very  efifective  course 
in  salesmanship  ^  is  teaching  its  students. 

Salesmanship  it  defines  as  "the  power  to  persuade  people 
to  purchase  product  at  a  profit."  "Your  object  is  to  per- 
suade the  will  of  the  one  to  whom  you  are  speaking.  Your 
object  is  to  get  him  to  decide  and  act  as  you  want  him  to 
decide  and  act,  .  .  .  You  must  also  make  him  feel  that 
he  wants  them"  (the  goods).  .  .  .  The  customer  should 
not  be  permitted  to  control  the  interview,  keep  him  on 
the  track.  .  .  .  Force  the  wedge  in  gently.  Be  modest 
and  moderate  in  your  claims  at  the  start."  It  goes  on 
to  point  out  that  the  salesman  must  have  analyzed  his 
goods,  studied  human  nature  and  the  particular  customer, 
and  then  sympathetically  built  up  a  selling  story  which 
is  calculated  to  win.  This  is  to  be  given  in  Introduction, 
and  First,  Second  and  Third  Selling  Talks.  The  price  is 
to  be  kept  in  the  background  until  the  close  of  the  first 
selling  talk. 

"But  when  you  have  stated  your  case  succinctly  and 
completely,  then  you  can  bring  your  selling  talk  to  a  close 
and  extend  the  opportunity  to  buy,  somewhat  like  this: 
'Now  as  to  price  and  terms,  the  total  is  only  .  .  .  dollars 
and  the  terms  (in  case  of  an  instalment  offer  or  time  bills) 
are  very  liberal  indeed  (here  state  the  terms)!' 

"There  is  a  great  deal  in  the  way  you  say  such  words 
as  'only.' 

"Be  positive — Do  Not  Waver. — Many  salesmen  act 
at  this  point  as  if  they  doubted  the  customer's  willingness 
or  ability  to  pay  the  price.  If  the  salesman  thus  doubts, 
the  customer  is  very  apt  mentally  to  echo  his  doubt  and 
then  the  customer  will  also  doubt  himself. 

"Be  positive,  not  only  objectively  but  subjectively. 

"Permit  no  doubt  to  enter  your  mind  or  be  reflected  in 
your  voice  or  manner  in  any  way." 

Here  are  some  fine  points  on  closing  a  sale: 

"In  retail  salesmanship,  where  no  order  has  to  be  signed, 

■Arthur  Frederick  Sheldon:  The  Science  of  Business  Building. 
Chicago. 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  II 

the  tactful  salesman,  having  presented  the  merits  of  his 
goods  through  a  brief  first  selling  talk,  possibly  one  in- 
volving only  two  or  three  points,  can  generally  clinch  the 
purchase  by  indirect  suggestion,  something  like  this: 

"'Shall  we  send  this  out,  Mrs.  Blank,  or  will  you  take 
it  with  you?' 

"Or,  in  cases  where  the  goods  are  not  delivered,  when  you 
feel  that  the  psychological  moment  has  come,  pick  up  the 
article  at  which  the  customer  has  been  looking,  set  it  to 
one  side  and  inquire,  'What  else  do  you  desire  to-day?' 

"A  student  in  the  retail  business  sends  us  the  following 
suggestions  which  clearly  illustrate  this  thought.  And  you 
note  how  they  helped  to  make  better  sales  and  to  save 
much  time: 

'"As  a  shoe  salesman  in  a  store,  when  a  customer  was 
deciding  between  a  $3.50  and  $4.00  shoe,  I  would  pick  up 
the  $4.00  pair  and  say,  'Shall  I  wrap  them  in  paper  or 
put  them  in  a  box?'  This  ended  the  sale  every  time  I 
tried  it. 

'"As  a  clerk  in  a  grocery  store,  when  a  customer  was 
deciding  between  a  75^  and  $1.00  article,  I  would  pick  up 
the  $1.00  article  and  tear  a  piece  of  paper  off  a  roll  at  my 
side.  Without  my  saying  a  word  the  customer  would  in- 
variably say,  "I'll  take  that  one,'  pointing  to  the  one  in 
my  hand. 

"These  and  hke  indirect  suggestions  can  be  profitably 
used  by  the  retail  salesman  at  the  close  of  his  first  selling 
talk." 

There  is  nothing  exceptional  in  this  author's  attitude 
toward  salesmanship.  Here  are  passages  from  the  same 
source  which  are  not  unUke  the  writings  and  point  of  view 
of  the  average  sales  promoter. 

^^  Advantages  of  the  Salesman's  Position. — You  have  come 
into  court  ready  with  your  case — thoroughly  prepared. 
The  customer,  on  the  other  hand,  is  likely  to  be  ignorant 
of  the  merits  of  the  subject.  The  trial  should,  therefore, 
be  a  one-sided  action,  which  means  that  you  should  win 
the  verdict  simply  because  of  your  thorough  preparation. 


12  CO-OPERATION   THE   HOPE    OF   THE    CONSUMER 

"When  I  advise  you  to  fortify  your  mind  against  the 
influence  of  a  customer's  adverse  suggestions,  not  to  listen 
to  his  tales  of  woe,  etc.,  but  to  batter  down  every  argument 
that  hinders  the  sale,  I  take  it  for  granted  that  through 
previous  counsels  and  instructions  you  are  an  accurate 
judge  of  character  as  well  as  a  just  man  and  hence  will  not 
abuse  the  powers  you  possess.  You  can  make  a  man  think 
with  you  if  you  work  on  his  feelings  or  higher  nature,  even 
though  you  run  counter  to  his  ordinary  judgment.  If  in 
this  way  you  overshadow  his  reason  sufficiently,  you  can 
spur  hun  to  almost  any  action  of  which  man  is  cap- 
able." 1 

To  treat  of  the  appHcation  of  these  principles  to  the 
business  of  causing  people  to  buy  what  and  where  they 
would  not  otherwise  buy,  a  number  of  important  periodicals 
and  numerous  books  are  published.  Indeed,  a  very  con- 
siderable technical  literature  has  grown  up  and  several 
important  and  well-paid  vocations  have  been  developed. 

We  buy  what      ^^^^  ^^^^  ^^'  "^^  ^^^  ^^^^^  ^^  Spend  our  money 
we  are  told  to  and  we  spend  it;  told  what  to  buy  and  we  buy 
"^  it.    To  what  extent  is  this  so? 

About  one  billion  dollars  is  spent  in  this  country  an- 
nually on  advertising.^    The  amount  has  grown  steadily 

'"Some  salesmen  try  to  get  their  customers  in  the  'yes  saying' 
attitude  of  mind.  They  start  in  by  making  a  remark  that  they  are 
sure  will  bring  an  affirmative  response,  a  'yes'  or  an  afJirmative  nod 
of  the  head.  These  are  followed  by  other  remarks  more  directly  re- 
lated to  the  quaUties  of  the  goods  and  all  inciting  'yes'  from  the  cus- 
tomer. The  customer  thus  gets  into  a  favorable  affirmative  state  of 
mind.  This  is  nearly  always  pleasurable  and  a  final  decision  to  buy 
comes  much  more  easily  than  when  the  customer  has  been  given  the 
chance  if  not  the  suggestion  to  make  objections  and  negations  about 
the  goods.  .  .  .  The  salesman  answers  as  many  objections  as  pos- 
sibk"  before  they  are  made.  He  does  so  in  this  way :  he  states  the  qual- 
ities and  uses  of  the  goods  so  clearly  and  completely  as  to  cover  the 
objections  if  made,  but  he  does  not  suggest  any  thought  of  the  objec- 
tion itself."— Paul  H.  Nystrom. 

*  In  other  words,  one  dollar  is  spent  for  "educating"  consumers  in 
what  to  buy,  where  a  little  over  seventy  cents  is  spent  for  all  other 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  13 

for  a  generation.^    And  we  may  be  sure  that  distributors 
would  not  spend  money  for  advertising  to  tell  Expenditure 
people  to  buy  and  what  to  buy  unless  enough  of  for  persuasive 
the  public  acted  upon  the  advice  to  make  the  ^*  °^ 
expenditure  profitable. 

Nor  is  this  all.  To  the  bilhon  dollars  spent  on  adver- 
tising must  be  added  all  oral  and  other  kinds  of  persuasive 
salesmanship,  amounting  to  perhaps  as  much  as  another 
billion  dollars,  or  a  total  of  two  billion  dollars — around  ten 
per  cent  of  all  that  is  paid  for  articles  bought  at  retail, — 
or  more  than  twice  the  estimated  total  cost  of  education 
in  this  country  in  1913. 

Now  this  means  that  a  demand  for  advertised  articles 
is  created  amounting  to  billions  of  dollars  per  year,  a  de- 
mand which  would  not  exist  for  these  specific  articles  but 
for  these  high  pressure,  adroitly  exercised  and  far  reaching 
sales  methods.  The  money  to  buy  this  enormous  output 
is  either  earned  by  the  consumer  for  the  purpose  or  sub- 
forms  of  education,  including  elementary  and  high  schools  (public  and 
private),  universities,  colleges,  professional  and  normal  schools. 

GENERAL  STATISTICS  OF  EDUCATION,  1913 

Classification  Enrolhnenl      Estimated 

Total  Cost 

Public  elementary  schools 17,474,269    $457,386,423 

Public  high  schools 1,134,771         64,159,952 

Private  elementary  schools 1,590,518         50,896,576 

Private  high  schools 148,238        13,949,196 

Other  public  and  private  secondary  sch'ls.  .  83,813  13,098,033 
Universities,  colleges  and  profess'l  schools . .  266,815  89j535.iio 
Normal  schools 94)455        i4>956,oo5 


$704,082,295 
*  Table  showing  comparison  of  receipts  of  newspapers  and  period- 
icals from  advertising  and  from  subscriptions  and  sales: 
Subscriptions  and  Sales 

1880 $  49,872,768 $  39,136,306 

1890 72,343,087 71,243,361 

1900 79,928,483 95,961,127 

1909 135,063,043 202,533,245 


14  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

tracted  from  savings  or  deflected  from  buying  some  other 
article.  Is  not  the  social  influence  of  this  artificially  created 
demand  worthy  of  study? 

If  space  and  the  scope  of  our  discussion  permitted,  I 
should  give  proper  credit  to  advertising  for  rendering 
valuable  service  in  many  ways.  But  it  is  not  my  purpose 
at  this  time  to  discuss  all  the  advantages  and  disadvan- 
tages of  the  advertising  and  persuasive  salesmanship  order 
of  distribution,  as  it  would  lead  us  too  far  afield  for  the  pur- 
poses of  this  book,  which  are  to  set  forth  what  seems  to  me 
the  anti-social  influences  of  advertising  and  to  suggest  a 
remedy. 

On  the  other  hand,  however,  I  might  in  passing  point 
to  the  aggressive  nuisance  of  certain  display  advertising. 
The  nuisance  From  this  there  is  no  escape.  The  big  words 
of  bui  board  on  the  bill  board,  in  the  street  car  and  even  in 
a  ve  sing  ^-^^  newspaper  catch  the  Hght  rays  and  pound 
them  back  onto  the  retina  whether  the  reader  will  or  no. 
As  I  ride  from  my  home  across  the  Jersey  meadows,  or  by 
train  to  Philadelphia,  I  must  refrain  from  looldng  out  of 
the  window  if  I  would  think  my  own  thoughts.  The  bill 
boards  cut  off  the  landscape  and  force  me  to  read  about 
tooth  paste  and  whiskey.  Think  of  this  waste  of  human 
attention  which  the  individual  is  powerless  to  avoid!  For, 
of  the  thousands  of  people  assaulted  by  this  boisterous  ag- 
gressiveness, only  a  small  fraction  are  to  respond  to  the 
appeal.  The  balance  have  their  time,  attention  and  strength 
stolen  with  no  redress.  When  people  come  fully  to  realize 
how  unjust  this  obtrusiveness  is,  how  it  is  really  no  better 
than  to  constantly  interrupt  and  annoy  a  person  who  is 
helpless,  it  will  cease  to  be  profitable  to  the  advertisers  be- 
cause of  the  resentment  of  the  public.  ^ 

*  "Just  now  the  chief  idea  in  this  sort  of  advertising  (sign  boards) 
is  vociferocity.  The  making  a  huge  din,  however,  would  render  the 
perpetrators  liable  to  prosecution  for  being  a  public  nuisance.  At 
present,  they  disregard  the  fact  that  the  eye  is  as  sensitive  to  discords 
as  is  the  ear.  Had  not  the  common  law  taken  the  auditory  sense  under 
protection  we  might  possibly  now  have  the  equivalents  of  myriads  of 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  1 5 

But  these  grosser  abuses  of  the  aggressive  seUing  system 
are  not  as  socially  damaging  as  the  unwilling  distraction 
and  the  characterization  of  so  much  of  our  environment 
by  the  sordid  slant. 

Wisest  Choice  Impossible  Under  the  Aggressive  Selling 
System 

First,  then,  it  does  not  seem  to  me  to  be  a  matter  of 
any  doubt  that  the  aggressive  advertising  method  of  push- 
ing products  must,   from  the  very  nature  of  causes  false 
the  case,  stimulate  an  artificial  and  false  esti-  estimate  of 
mate  of  buyable  goods,  and  unjustifiably  mag-       ^^' 
nify  the  importance  of  things  in  the  economy  of  Ufe.^    Each 

boilcr-shops  calling  the  attention  of  passers  along  the  highways  to  the 
merits  of  all  sorts  of  wares,  with  megaphonic  phonographs,  steam 
calliopes,  and  other  appalling  acoustic  devices.  But  that  is  precisely 
the  sort  of  thing  that  thousands  of  advertisers  all  over  the  country  are 
doing  to  the  eye.  .  .  .  The  time  will  undoubtedly  come  with  us,  as 
it  has  in  various  other  parts  of  the  world,  when  to  affront  the  eye  of 
the  public  in  such  ways  will  be  just  as  indecent  as  would  be  an  en- 
deavor to  attract  public  attention  by  sending  a  powerful  stench  to 
greet  the  nostrils  of  the  people  that  pass.  These  unsavory-looking 
things  smell  to  the  eye.  .  .  .  When  the  people  are  enjoying  the 
charms  of  nature  they  do  not  want  to  be  reminded  of  the  ills  of  flesh 
or  of  various  other  things  to  which  these  advertising  monstrosities 
call  attention.  .  .  .  The  fact  cannot  be  too  strongly  emphasized  that 
such  advertisers  are  possessing  themselves  of  values  created  by  enor- 
mous outlays  for  purely  public  purposes,  and  are  utilizing  these  values 
in  a  way  detrimental  to  the  public  interest." — Sylvester  Baxter:  "The 
Nuisance  of  Advertising,"  Century,  Januar>%  1907. 

1  Unluckily,  the  arrangement  by  which  labor  is  remunerated  in 
money  wages  has  developed  in  many  a  habit  of  mind  which  occasion- 
ally leads  to  very  erroneous  notions  concerning  the  elements  of  general 
well-being.  Because  for  so  many  things  we  depend  on  exertion  which 
has  to  be  directly  purchased,  and  because  it  is  convenient  to  estimate 
the  value  of  these  services  in  terms  of  the  currency,  people  are  apt 
to  forget  that  a  very  large  part  of  the  things  that  minister  to  happiness 
bear  no  price  at  all, — bracing  air,  fine  scenery,  cannot  be  sold  by  the 
gallon  or  the  square  inch,  but  they  form  as  real  a  part  of  the  riches  of 
the  community  that  commands  them  as  fine  wheaten  loaves  or  dainty 


1 6  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

advertiser  and  seller  recommends  the  purchase  of  his  par- 
ticular wares,  but  the  voice  of  thousands  of  advertisers  is 
united  in  the  chorus  which  appeals  to  the  public  to  want, 
seek,  and  buy  things.  It  is  entirely  demonstrable  that  the 
aggressive  pushing  of  a  particular  product  creates  a  de- 
mand for  that  product  approximately  proportionate  to 
the  expense  of  the  campaign.  If,  then,  all  distributors 
have  one  refrain  in  common,  namely,  "Buy  things,"  can 
there  be  any  doubt  of  the  result? 

Can  such  enormous  influence  do  otherwise  than  conduce 
to  materialism  and,  therefore,  away  from  the  life  of  the 
intellect  and  the  spirit?  There  is  no  advertising  of  the 
stellar  universe,  of  the  mountains  and  seas  and  forests;  of 
the  contemplative  life  or  the  resources  of  thought  and 
meditation. 

Condiments  and  dainties  are  recommended,  but  not  the 
exercise  which  would  give  a  better  relish  for  the  food.  The 
automobile  is  commended  but  not  so  the  dehghts  of  walk- 
ing. Over-emphasis  is  placed  upon  material  things  and 
especially  such  as  must  be  bought  for  money.  Then  un- 
doubtedly we  are  led  to  strive  too  strenuously  to  earn 
the  money  to  spend  for  that  which  we  might  better  do 
without.  And  we  save  too  Uttle  of  the  money  we  earn. 
The  consumer  Second,  the  consumer  is  led  by  advertising 
caused  to  buy  and  salesmanship  to  buy  things  which,  cost 
unwise  y         considered,  should  not  be  purchased. 

What  is  a  wise  purchase?  Only  that  thing  which  (i)  is 
worth  more  to  the  purchaser  than  the  money  which  is  paid 
for  it  and  could  otherwise  be  saved;  (2)  is  worth  more 
than  the  abstinence  from  effort  to  earn  the  money  which 
buys  the  thing  and,  finally,  (3)  would  contribute  at  least 
as  much  to  the  need  for  shelter,  clothing,  food  or  other 
satisfaction  as  would  another  equally  or  less  costly  article 
either  to  serve  the  same  purpose  or  a  different  purpose.  If 
I  am  influenced  to  buy  when  I  might  better  save  my  money 
or  the  effort  to  earn  it,  or  if  I  could  get  more  satisfaction 
books." — Richardson  Evans:  "Advertising  as  a  Trespass  on  the 
Public,"  igth  Century,  June,  1895. 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  1 7 

out  of  some  other  purchase,  or  the  same  satisfaction  for 
less  price,  the  influence  which  causes  me  to  make  the  un- 
wise purchase  is  clearly  anti-social.  Is  the  aggressive  ad- 
vertising selling  method  Ukely  to  cause  consumers  to  buy 
what  they  ought  to  buy?  It  would  seem  from  the  nature 
of  the  case  that  the  consumer  is  more  likely  to  be  induced 
to  buy  the  wrong  thing.  In  the  first  place,  it  is  the  more 
profitable  article  which  is  Hkely  to  be  advertised  since 
there  is  more  margin  out  of  which  to  pay  for  the  advertis- 
ing. The  article  with  the  smaller  profit  can  usually  be 
bought  for  less. 

Of  course  it  is  not  always  true  that  advertising  makes  a 
higher  price  necessary.  In  some  cases  advertising  so  in- 
creases demand  as  to  make  possible  enough  lower  cost  of 
production  to  more  than  pay  for  the  extra  selling  expense. 
On  the  other  hand,  it  is  possible  to  put  goods  in  a  fancy 
package  that  appeals  to  the  eye  and  then  so  to  advertise 
and  push  them  as  to  sell  at  prices  materially  above  what 
the  same  goods  are  sold  for  in  bulk.  More  will  be  said 
about  this  in  our  chapter  on  Costs.  ^ 

The  same  principles  are  applied  to  most  other  articles 
advertised.  They  are  sold  for  more  because  Artificial  crea- 
they  can  be,  thus  the  consumer  is  led  to  buy  tion  of  new 

I  1  •  1  •  demand 

the  wrong  thmg,  the  more  expensive. 

The  expense  of  creating  first  a  consciousness  of  a  new 
want  and  a  demand  for  the  article  to  fill  it  is  costly  and 
the  cost  comes  out  of  the  consumer.  The  business  of  creat- 
ing new  demands  is  extensive.  Mr.  W.  R.  Hotchkin,^ 
speaking  on  this  subject  says: 

"It  is  all  very  well  to  get  the  sales  of  things  that  people 
want  to  buy;  but  that  is  too  small  in  volume.  We  must 
make  people  want  many  other  things,  in  order  to  get  a 
big  increase  in  business.  So  the  advertising  manager  must 
have  two  things  constantly  in  mind: 

''First — What  do  people  want? 

» See  Chapter  III. 

*  Mr.  Hotchkin  was  for  ten  years  mercantile  director  and  advertising 
manager  for  John  Wanamakcr. 


l8  CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

"And  his  advertising  must  let  them  know  that  he  is  able 
to  supply  that  want.    That  is  one  vital  side  of  advertising. 

"But  the  other  side  is  not  less  important  and  is  too 
often  either  neglected  or  only  half  done,  and  that  vital 
question  is:  What  do  I  want  to  sell  that  I  must  make 
people  want  to  buy?  " 

Of  making  more  people  want  cigarettes,  the  same  writer 
says: 

"The  concern  that  realizes  the  power  of  suggestion  will 
tell  such  a  story  of  the  deHghts  that  come  from  smoking 
that  particular  brand,  that  every  smoker  will  want  to  try 
it  and  thousands  of  non-smokers  will  be  tempted  to  learn 
to  smoke  in  anticipation  of  enjoying  the  deUghts  that  have 
been  exploited," 

Mr.  Hotchkin  says  that  the  unknown  want  is  the  most 
powerful  factor  in  making  sales. 

"To  tell  the  people  why  they  want  the  goods  and  to 
convince  them  of  their  need  of  them." 

"If  business  were  confined  to  the  sales  that  would  be 
made  to  people  who  woke  in  the  morning  with  defmite 
wants  on  their  minds,  most  department  stores  would  have 
to  go  out  of  business." 

Of  this  kind  of  selling  to  people  who  did  not  know  they 
wanted  anything,  the  writer  says: 

"Everybody  is  happy  because  a  real  constructive  piece 
of  selling  has  been  done." 

But  is  everybody  happy,  it  occurs  to  us  to  ask?  How 
real  and  permanent  is  the  happiness  of  the  buyer  who  has 
spent  his  good  money  for  the  satisfaction  of  a  want  newly 
crystallized  into  a  definite  demand  by  an  advertiser  for 
revenue  only?  Is  not  the  consumer,  wandering  through  a 
land  of  habit,  convention  and  perplexity  wrongly  directed, 
made  to  pay  for  information  which  he  loses  out  in  following? 

There  is  no  doubt  that  our  habits  are  changed  by  ad- 
vertising. When  the  United  States  Government  thinks 
Our  habits  rno^e  sea-mussels  and  tile  fish  should  be  eaten, 
are  changed  it  procccds  to  advertise  and  forthwith  more 
by  advertising  ^j.^  called  for.     The  maker  of  flour  bags,  to 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  1 9 

create  a  demand  for  his  wares,  advertises  to  cause  women 
to  bake  their  own  bread,  and  they  do.  Then  the  bakers 
get  together  to  offset  this  by  stimulating,  through  adver- 
tising, the  purchase  of  bakers'  bread,  and  this  advice  is 
also  followed.  The  whiskey  makers  of  Kentucky,  fearing 
the  state  would  vote  for  prohibition,  urged  voters  to  oppose 
prohibition  because  proliibition  would  increase  their  taxes 
and  enough  of  them  took  the  advice  to  carry  the  distiller's 
point.  The  National  Dairy  Council  used  full  pages  in 
the  Saturday  Evening  Post  to  stimulate  the  larger  use  of 
milk,  butter,  cheese  and  ice  cream,  and  with  good  results. 
In  view  of  the  great  economic  and  social  importance  of 
wisely  directed  consumption  ^  it  is  pertinent  to  inquire 
how  far  demand  is  deflected  from  right  things  to  wrong 
things  ^  by  the  present  selling  system.  Many  hundreds 
of  expensive  automobiles  are  purchased  each  year  by 
people  who  have  to  mortgage  their  homes  to  pay  the  bills. 
Hundreds  of  millions  of  dollars  are  spent  annually  for 
patent  medicines  ^  which   were  among  the  earliest  and 

*  "Economical  consumption  is  secured  when  the  cheapest  combina- 
tion of  foods  containing  the  required  ingredients  and  both  palatable 
and  digestible  for  the  given  consumer,  is  selected.  .  .  .  Science  has, 
until  recently,  done  very  little  to  aid  the  ordinary  man  to  direct  his 
consumption  wisely  and  economically,  although  every  investigation 
into  the  consuming  habits  of  the  poorer  classes  reveals  the  fact  that, 
small  as  are  their  incomes,  a  considerable  part  is  wasted  because  the 
most  economical  foods,  clothing,  etc.,  are  not  selected." — H.  R. 
Seager:  Economics. 

^  "Against  the  artificial  stimulation  of  the  demand  for  things  in- 
volving well-recognized  dangers  to  society,  such  as  habit-forming 
drugs  and  intoxicants,  repressive  measures  have  been  very  generally 
adopted;  but  simon-pure  commercialism  still  inspires  the  pushing  of 
many  wares  which  would  better  remain  unsold." — Herbert  A.  Smith. 

*  The  Life  Extension  Institute  gives  §500,000,000  as  the  amount 
annually  spent  for  drugs  in  this  country,  and  most  of  these  are  self- 
administered.  George  W.  Alger  {Atlantic,  August,  1904)  amusingly 
remarks  that  "So  far  as  drugs  and  medicines  are  concerned,  we 
are  so  accustomed  to  quack  nostrums  that  we  consider  them  with  the 
utmost  toleration,  and  accept  good-naturedly  the  maxim  of  one  of 


20  CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

most  extensively  advertised  articles.  Who  knows  how 
much  the  consumption  of  intoxicating  liquors  is  due  to  the 
demand  stimulated  by  advertising — but  surely  enough  to 
pay  the  advertising  bill. 

The  extent  to  which  advertised  foods  are  bought  when 
more  nourishing  foods  could  be  had  for  less  money,  it  is, 
of  course,  difficult  to  say.  Probably  it  would  not  be  far 
wrong  to  guess  that  equal  nutritive  value  unadvertised 
could  be  bought  for  two-thirds  of  the  amount  spent  for 
trade-marked  foods.  It  is  fair  to  admit,  however,  that 
greater  purity  and  cleanliness  are  claimed  for  the  packaged 
foods. 

In  1913  the  Chicago  Tribune  made  an  investigation  to 
learn  why  some  30,000  housekeepers  ^  had  purchased  cer- 
tain food  products.    It  was  found  that — 

6  per  cent  were  influenced  by  friends, 
36  per  cent  were  influenced  by  advertising, 
55  per  cent  were  influenced  by  retailers. 
The  dealer  is  depended  upon  to  take  advantage  of  this 
Where  adver-  momentum  caused  by  advertising  and  to  push 
ofl°s\iesman-  ^^^   product   onto    the   purchaser,     A   recent 
ship  begins     writer  says  that  "What  a  salesman  does  is  to 

the  most  successful  of  modern  'nerve  invigorators '  that  'the  value  of 
an  advertised  medium  depends  upon  what  you  put  on  the  bottle 
rather  than  on  what  you  put  in  it.'" 

1  Women  are  the  nation's  spenders.  While  only  one  woman  in  five 
is  gainfully  occupied  as  an  earner,  it  is  estimated  that  "of  the  ten 
billion  dollars  spent  annually  in  the  United  States  for  home  mainten- 
ance, food,  shelter  and  clothing,  fully  90  per  cent  is  spent  by  women." 
In  an  article  by  Martha  B.  Bruere  ("Educating  the  Consumer," 
Outlook)  from  which  this  quotation  is  taken,  the  author  continues, 
"we  are,  most  of  us,  a  little  loath  to  admit  that  an  education  in  house- 
keeping must  be  almost  entirely  an  education  in  consumption."  The 
vast  bulk  of  production  now  goes  on  outside  the  home,  but  the  vast 
number  of  girls  are  still  taught  exclusively  how  to  make  things,  not 
how  to  buy  effectively.  And  even  if  women  did  receive  such  training 
as  part  of  their  education,  would  not  the  hundreds  of  millions  of  dollars 
spent  by  advertisers  to  keep  before  their  eyes  the  alleged  advantages 
of  certain  products  go  far  to  offset  this  training? 


ADVERTISING,   SALESMANSHIP,   VS.   CONSUMER  21 

raise  the  marginal  utility  of  the  article  he  is  trying  to  sell 
to  such  a  point  that  in  the  customer's  mind  it  overlaps 
the  marginal  utility  of  all  other  goods  at  that  particular 
time.  Dr.  Nystrom  ^  admits  that  "The  question  may  be 
raised  as  to  whether  this  is  in  the  interest  of  the  consumer 
and  of  society  at  large."  "In  answer,"  he  continues,  "it 
may  be  pointed  out  that  desire  had  to  be  aroused  and  in- 
tensified in  order  to  introduce  into  general  use  practically 
every  article  of  modem  convenience  and  comfort." 

Is  the  consumer  afforded  proper  facilities  to  enable  him 
to  choose  wisely?  In  the  opinion  of  the 'writer  there  is  no 
department  of  our  social  life  which  leaves  so  much  to  be 
desired.  We  Americans  are  far  abler  to  turn  our  efforts 
into  dollars  than  to  turn  our  dollars  into  real  utility  values. 
We  work  hard  and  successfully  to  earn  money,  but  then 
we  "spend  our  money  for  that  which  is  not  bread  and  our 
labor  for  that  which  satisfieth  not."  When  our  forefathers 
fashioned  with  their  own  hands  that  which  they  were  to 
use,  the  manual  effort  was  an  automatic  restraint  upon 
spending  it  for  useless  things.  But  we  now  work  for  money 
and  have  no  conception  of  its  value.  It  is  here  that  we 
are  at  sea.  In  the  absence  of  dominating  life  purpose  and 
definite  plan,  we  drift.  We  are  peculiarly  susceptible  to 
the  influence  of  sales  persuasion,  printed  and  oral,  and  we 
are  woefully  without  real  intelligent  guidance. 

The  incentive  of  the  dealer  and  his  representatives  to 
overreach  and  sell  an  article  for  better  than  it  is,  is  too 
well    recognized    to    need    extended    mention  Antagonistic 
here.     The   salesman   has   interests   to   serve  sd^r^^an? 
which  constantly  run  counter  to  the  interests  buyer 
of  the  consumer.    Large  profit  on  an  article  to  the  dealer 
means  a  large  price  to  the  customer.     This  antagonistic 
interest  between  dealer  and  consumer  exerts  a  constant 
pressure  and  leads  to  all  sorts  of  disadvantageous  results 
to  the  consumer.     The  dealer  is  a  specialist,  the  average 
consumer  knows  nothing  about  the  goods. ^     It  is  an  un- 

1  Paul  H.  Nystrom,  Ph.  D.:  Economics  oj  Retailing,  page  87. 

*  Can  I  look  to  the  retailer  for  advice  when  I  wish  to  buy  an  article 


22  CO-OPERATION  THE  HOPE   OF  THE  CONSUMER  ^^ 

fair  encounter  in  which  the  chances  are  all  against  the 
consumer. 

We  are  not  here  absolving  the  consumer  from  the  main 
responsibility  for  wisely  ordering  his  economic  life,  but 
are  alleging  that  in  the  process  of  enhghtenment  and  educa- 
tion ^  he  is  retarded  by  the  inevitable  influence  and  im- 
pact of,  and  conditions  brought  about  by,  the  distributive 
system  under  which  we  live.  It  is  sometimes  said  that 
the  consumer  should  inform  himself  in  advance  regarding 
everything  he  is  to  buy.  But  the  fact  is  that  the  sources 
of  information  are  so  meager  or  biassed  and  the  buyable 
articles  of  our  time  so  numerous  that  to  acquire  such  in- 
formation is  well-nigh  or  quite  impossible,  and  even  an 
effort  to  acquire  it  is  a  business  in  itself.  It  is  practically 
out  of  the  question  to  be  well  informed  as  to  the  nature, 

of  which  I  know  little  of  the  various  brands  and  qualities?  One  usually 
does,  as  he  is  the  only  expert  one  knows.  But  there  is  no  assurance 
that  his  advice  is  unbiased.  It  is,  for  instance,  quite  customary  to 
pay  salespeople  a  bonus  for  selling  especially  profitable  goods,  "P. 
M.s,"  as  they  are  called. 

Shall  I  go  to  an  automobile  agent  to  ask  if  I  should  buy  an  auto- 
mobile or  what  automobile  to  buy?  Could  the  agent  advise  against 
buying  and  buying  his  machine  and  still  stay  in  the  business? 

1  Some  constructive  work  is  being  done  along  these  lines.  The 
Board  of  Health  restaurant  in  New  York  offers  on  a  given  day  two 
balanced  menus  of  equal  food  value,  one  at  low  price,  one  at  higher 
price.  See  W.  S.  Borge:  True  Food  Values  and  Their  Low  Cost, 
pages  23  and  24  for  further  description. 

The  Life  Extension  Institute,  by  means  of  an  interesting  experiment 
in  which  it  has  co-operated,  has  awakened  many  people  to  the  possibil- 
ity of  living  on  simpler,  less  costly  food.  This  experiment  consisted  of 
feeding  a  squad  of  husky  men  for  25  cents  a  day  apiece.  A  booklet 
descriptive  of  this  Rookie  Squad  Diet  Experiment,  giving  recipes,  is 
issued  by  the  Institute  at  10^  a  copy.  See  also  the  L.  E.  I.  Health 
Letters,  number  16,  "The  Low  Cost  of  Living,"  and  34,  "How  to 
Spend  25  Cents  a  Day  for  Food." 

There  ar  •  other  agencies  which  are  working  for  saner  eating,  but 
unfortunately  all  of  these  reach  very  few  people,  comparatively 
speaking,  and  in  an  unsystematic,  occasional  way. 


ADVERTISING,   SALESIVIANSHIP,   VS.   CONSUMER  23 

Utility  and  merits  of  all  one  buys,  to  say  nothing  of  know- 
ing about  values  and  fair  prices. 

But  if  it  be  admitted  that  the  unfortunate  influences 
here  set  forth  follow  the  operation  of  aggressive  distribu- 
tion, the  question  arises  whether  the  distributor  should  in 
justice  be  held  responsible.  Is  not  the  consumer  on  notice 
to  guard  his  own  interests?  Does  not  the  distributor  pro- 
ceed on  the  motto,  "Let  the  buyer  beware"?  But  the  dis- 
tributor assumes  to  advise  the  consumer  and  the  consumer 
so  far  avails  himself  of  this  advice  as  to  pay  for  the  counsel 
about  a  billion  dollars  a  year.  This  round  fee  The  consumer 
the  distributor  accepts  together  with  perhaps  ^^^^'^^-^^^ 
as  much  more  paid  for  oral  and  other  persuasive  for  the  money 
salesmanship.  So  that  each  family  in  the  ^«  ^p^'^'*^ 
country  pays  around  one  hundred  dollars  per  year  to  be 
told  what  and  where  to  buy.  Regardless  of  the  degree  of 
responsibility  which  is  or  should  be  felt  by  the  distributor 
for  the  results  of  this  advice,  it  is  certainly  perrinent  for 
the  consumer  to  inquire  what  he  gets  for  his  money.  Is  he 
paying  to  be  advised  whether  and  what  and  where  to  buy 
and  being  told  wrong?  Is  he  being  so  ad\ased  as  to  act  on 
the  average  against  his  own  interest  and  having  withheld 
from  him  the  information  which  would  enable  him  to  act 
more  wisely? 

As  noted  eariy  in  this  chapter,  a  distributive  system 
ideally  to  serve  the  consumer  would  encourage  him  to  re- 
frain from  buying  when  that  were  wise,  to  buy  only  the 
wise  thing  and  to  act  consciously  and  inteUigently  in  ex- 
pressing himself  in  purchases  and  the  use  thereof.  Can  we 
look  for  such  ser\ice  from  our  present  distributive  machine? 
Is  it  not  indeed,  inherently  impossible  for  a  system  pro- 
pelled as  ours  is  to  perform  this  service  or  even  to  refrain 
from  harming  the  consumer  as  here  cited? 


CHAPTER  II 

ADULTERATION  AND  SHORT  MEASURE 

"Men  may  spend  a  long  life  without  an  indictable  action, — and 
without  an  honest  one." — Henry  Ward  Beecher. 

"It  is  only  necessary  to  ask  a  few  questions  as  to  the  progress  of  the 
articles  of  commerce  from  the  fields  where  they  grew  to  our  houses,  to 
become  aware  that  we  eat  and  drink  and  wear  perjury  and  fraud  in  a 
hundred  commodities." — Ralph  Waldo  Emerson. 

"She  (the  housewife)  must  be  as  careful  in  choosing  the  men  who 
supply  food  for  her  table  as  she  is  in  choosing  her  physician,  for  un- 
doubtedly upon  them,  more  than  upon  the  doctor,  does  her  health 
and  that  of  her  family  depend."— Dr.  H.  E.  Barnard,  Food  Editor, 
New  York  Mail. 

Scarce  indeed  are  the  innocents  who  are  unaware  of  the 
fact  that  goods — and  especially  foodstuffs — are  frequently- 
debased,  but  few  who  know  of  the  evil  realize  its  extent  or 
the  subtlety  of  the  methods  employed.  Dr.  Harvey  W. 
Wiley,  ^  of  Washington,  is  authority  for  the  statement  that 
the  problem,  even  in  its  larger  aspects,  is  still  a  very  con- 
siderable one.  Dr.  Lewis  B.  Allyn,^  of  Westfield,  Massa- 
chusetts, points  out  that  from  eight  to  fifteen  per  cent  of 
Extent  of  the  ^^^  foods  sold  are  debased,  while  Alfred  W. 
impure  food  McCann,  food  editor  for  the  New  York  Globe, 
^"^  says  of  adulteration  and  misbranding,   "The 

evil  is  an  epidemic.  It  never  seems  to  abate."  Mr.  McCann 
adds  that  probably  three  million  people  are  made  ill  in 
this  country  every  year  by  adulterated  foods. 

Gaston  G.  Netter,  president  of  the  International  Pure 
Food  Association,  says: 

"If  you  took  all  the  food  in  New  York  City  to-day  and 

^  See  Dr.  Wiley's  book,  looi  Tests. 

"  Dr.  Allyn  is  the  compiler  of  the  well-known  "Westfield  List"  o^ 
pure  foods. 


ADULTERATION  AND  SHORT  MEASURE        25 

put  it  in  a  big  tent  down  in  Texas,  I  would  throw  away 
40  per  cent.  The  people  here  in  New  York  City  are  being 
hourly  poisoned  by  food  labeled  as  absolutely  pure.  I 
buy  it  and  test  it  every  day  and  I  know." 

The  New  York  Globe  stated  in  19 13  that  spoiled  meat  was 
sold  by  the  ton  in  New  York  City. 

Examples  of  adulteration  and  its  allied  evils  press  almost 
daily  on  our  attention,  and  thus  far  no  adequate  and  per- 
manent remedy  has  been  found.  Let  us  consider  critically 
some  of  the  methods  now  being  tried. 

When  the  federal  pure  food  law  was  passed,  it  was  hailed 
by  many  as  a  source  of  complete  cure  for  the  trouble. 
Some  of  the  more  public  and  blatant  food  Federal  law 
poisoners  and  debasers  have  been  caught  and  and  its  opera- 
treated  as  outlaws,  and  others  have  been 
frightened  and  put  on  their  guard.  Indeed,  the  statute  has 
proven  itself  of  great  value,  a  smart  steel  trap  for  the 
large  and  clean-cut  offenders.  But  while  the  federal  law 
yent  into  effect  in  June,  1906,  so  far  as  it  was  permitted 
to  become  operative  after  shunting  its  execution  away 
from  the  Bureau  of  Chemistry  of  the  Department  of  Agri- 
culture,^ there  are  still  thousands  of  cases  of  violation  of 
even  its  liberal  provisions  which  are  taken  cognizance  of 
by  the  federal  law  department. 

Again,  the  federal  law  and  inspection  can  only  reach  such 
foods  as  are  shipped  from  one  state  to  another.  In  the 
case  of  meat,  for  instance,  it  has  no  jurisdiction  over  ani- 
mals killed  and  sold  in  the  same  state.  CaroHne  Bartlett 
Crane,  an  expert  investigator,  finds  that  the  federal  in- 
spection is  not  so  rigorous  in  its  inspection  of  meats  for 
use  in  this  country  as  for  those  sent  abroad;  some  animals 
used  here  would  be  rejected  in  Europe. 

In  any  case,  the  law  does  not  go  far  enough.  The  govern- 
ment stamp  does  not  indicate  how  old  the  animal  was  nor 

*  While  the  original  act  placed  the  direction  of  the  work  in  the 
Bureau  of  Chemistry  of  the  Department  of  Agriculture,  a  special  pro- 
vision was  later  made  whereby  this  work  was  placed  with  the  so-called 
Remscn  Board. 


26  CO-OPERATION  THE  HOPE   OF   THE  CONSUMER 

how  long  it  has  been  killed,  but  only  that  it  was  not  dis- 
eased when  slaughtered. 

Neither  can  any  law  reach  the  subtler  forms  of  food 
No  law  can  debasement.  It  is  not,  perhaps,  coarse,  poi- 
reachthe  sonous  adulteration  that  the  consumer  needs 
o^Sdde"!"^  most  to  fear.  It  is  the  hundreds  of  ways  of 
basement  debasing  and  cheapening  a  product  which  the 
consumer  is  unable  to  detect.^ 

1  There  are  some  practices  which,  while  defrauding  in  furnishing  an 
unwholesome  food,  also  cheat  the  consumer. 

"Through  the  greed  for  profit,"  says  an  article  in  the  New  York 
Times,  March  5,  the  health  of  a  large  part  of  the  communities  in  the 
five  boroughs  and  the  adjacent  districts  is  continuously  jeopardized 
by  the  illegal  practices  of  the  shippers  and  distributors,  is  the  charge 
made  by  Commissioner  John  J.  Dillon  of  the  State  Department  of 
Foods  and  Markets. 

"With  the  co-operation  of  the  Department  of  Health,  the  District 
Attorney's  Office,  the  Federal  Government,  and  the  New  York  Society 
for  the  Prevention  of  Cruelty  to  Animals,  the  Commissioner  expects 
immediately  to  put  an  end  to  conditions  that  are  the  most  menacing 
to  the  general  health  of  the  people  that  has  come  to  the  attention  of 
the  department  since  its  inception.  Here  is  the  situation  as  outlined 
by  the  Commissioner  yesterday: 

"The  people  of  the  City  of  New  York  annually  consume  or  buy 
thirty-five  millions  head  of  poultry  that  are  slowly  dying  at  the  time 
they  are  prepared  for  the  retail  markets.  It  has  been  found  by  sci- 
entific tests  that  the  poultry  when  received  here,  if  not  killed  promptly, 
would  die  within  three  to  four  days.  For  the  privilege  of  eating  this 
diseased  poultry  the  people  of  New  York  are  annually  defrauded  of 
approximately  $7,000,000. 

"The  fact  that  the  poultry  is  slowly  dying  when  slaughtered  by  the 
kosher  butchers  is  expressed  on  the  authority  of  the  Department  of 
Agriculture  at  Washington. 

"There  are  7,000  cadoads  of  live  poultry  shipped  here  from  the 
Western  States  annually,  with  approximately  5,000  fowls  to  a  car, 
averaging  four  pounds  each,  totalling  140,000,000  pounds  of  poultry. 
The  average  wholesale  price  is  about  20  cents  a  pound,  making  a  total 
of  $28,000,000.  This  poultry  retails  at  approximately  25  cents  a 
pound,  making  a  total  cost  for  this  article  of  food  of  $35,000,000 
annually. 


ADULTERATION  AND  SHORT  MEASURE        27 

Qualities  shade  off  into  one  another  by  gradations  which 
are  imperceptible  to  the  layman,  and  abuses  are  too  subtle 
and  too  concealed  to  be  reached  effectively  by  law. 

There  is  considerable  activity  in  the  health-departments 
of  numerous  states  and  cities,  but  the  question  of  pure 
foods  is  still  a  serious  one  and  what  remains  to  be  done  is 

"The  poultry,  when  purchased  by  the  shippers  in  the  West,  must 
be  delivered  by  the  producers  in  the  form  of  birds  with  empty  crops. 
If  the  fowls  have  any  food  in  the  crops  the  producers  must  consent 
to  a  reduction  allowance  of  10  per  cent  of  the  gross  weight  of  each 
fowl. 

"The  custom  of  handling  live  poultry  in  transit  is  to  physic  the 
birds  the  first  day.  Then  on  the  second  day  the  fowls  are  fed  light 
food  without  water,  with  mixtures  of  red  pepper  to  irritate  the  stom- 
ach. For  twenty-four  hours  before  arriving  at  New  York  the  fowls 
arc  kept  without  food  and  water.  We  will  quote  the  special  report 
to  us  from  the  United  States  Department  of  Agriculture  for  the  de- 
tails of  the  further  process  in  the  shipment  of  live  poultry  to  this 
market,  as  follows: 

"The  evil  of  the  system  of  feeding  practiced  in  the  cars  of  poultry 
entering  New  York  is  found  in  the  twenty-four-hour  star\'ation  prac- 
tice, followed  by  the  giving  of  the  watery  mixture  of  sand,  gravel, 
corn,  and  wheat,  mixed  with  the  paste-forming  bran  and  shorts.  The 
latter  cause  the  mass  to  stick  to  the  walls  of  the  crop  of  the  fowls  and 
prevent  its  passage  into  the  stomach.  As  a  consequence  hunger  re- 
mains unsatisfied  and  the  fowl  continues  to  eat  until  it  can  hold  no 
more.  Given  in  the  proper  way,  all  the  substance  used  in  stuffing 
the  birds  are  recognized  poultry  foods,  but  the  harm  in  this  case  comes 
from  the  way  they  are  put  together. 

"When  the  chicken's  crop  becomes  distended  with  the  pasty  mix- 
ture, an  inflammation  soon  develops.  Food  cannot  reach  the  empty 
stomach  and  pathological  conditions  assert  themselves.  The  fowl 
begins  to  lose  weight,  appears  sickly,  and  would  die  in  three  or  four 
days  were  it  not  sold  and  killed  in  the  meantime.  Of  course,  no  one 
feels  inclined  to  use  as  food  the  body  of  an  animal  that  is  slowly  dying. 

"Commissioner  Dillon  said  the  investigation  by  the  Department  of 
Agriculture  disclosed  that  chickens  weighing  two  pounds  and  ten 
ounces  carried  stuffed  crops  weighing  eight  ounces,  or  20  per  cent  o\ 
the  weight  of  the  fowl.  On  a  four-p'umd  roasting  chicken  the  weight 
of  the  crop  was  found  to  be  thirteen  a,.d  a  half  ounces." 


28  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

perhaps  even  more  difficult  than  what  has  been  accom- 
plished. 

Local  regulation  of  sanitary  conditions  is  valuable,  but 
to  make  it  thorough  and  complete  is  hopeless.  It  costs 
Local  reguia-  nioney  to  keep  things  clean  and  sanitary.  And 
tion  valuable  sincc  most  handling  is  not  under  the  eve  of 

but    thorough  .  .  i.  -r  .  '  i. 

inspection  any  mspcctor,  how  can  the  customer  expect 
hopeless  ^j^g  average  tradesman  to  incur  the  expense  of 
exercising  care  for  which  he  will  get  no  credit  or  profit, 
and  for  the  omission  of  which  he  gets  no  blame;  since  the 
test  tubes  of  a  chemist  fail  to  detect  un cleanliness. 

What  rehef  for  dirty  and  unsanitary  conditions  is  there 
for  the  housewife  who  cares?  Dr.  H.  E.  Barnard,  food 
editor  of  the  New  York  Evening  Mail,  in  an  article  headed 
"Housewife  Must  Rule  Retailer,"  goes  on  to  tell  how  she 
is  to  do  it.  He  urges  that  the  federal  authorities  "cannot 
regulate  the  butcher's  meat  box,  the  grocer's  care  of  dried 
fruits,"  and  so  on.  "All  this  work,  for  the  most  part  local 
in  character,  is  largely  to  be  shaped  and  directed  by  the 
housewife."    How  can  this  be  done? 

"The  food  official  has  suggested  the  following  methods 
by  which  the  woman  who  wishes  may  complete  the  work. 

"In  the  first  place  she  must  awaken  to  the  fact  that  the 
conditions  of  cleanliness  she  insists  upon  in  her  kitchen 
and  dining  room  are  just  as  necessary  wherever  her  food  is 
exposed  to  dirt,  dust  and  flies. 

"The  fact  that  the  meat  left  by  the  butcher's  boy  is 
protected  by  a  brown  paper  wrapper  is  no  indication  of 
the  care  it  received  prior  to  that  time;  it  tells  no  story  of 
possibly  diseased  animals,  of  unsanitary  slaughter  houses, 
of  lack  of  refrigeration. 

"She  must  not  rely  upon  the  telephone  as  the  means  of 
communication  with  her  grocer  and  baker.  She  must 
make  it  her  duty,  not  only  to  her  family  but  to  the  com- 
munity, to  visit  these  distributing  points  and  to  determine 
for  herself  that  her  orders  are  filled  by  clean,  healthy  and 
careful  clerks,  with  material,  whether  it  be  raw  or  cooked 
product,  which  has  been  properly  cared  for.  .  .  . 


ADULTERATION  AND   SHORT  MEASURE  :.; 

"If,  having  given  her  trade  to  the  men  whom  she  has 
personally  assured  herself  can  serve  her  with  clean  food, 
she  finds  practices  creeping  in  which  are  not  acceptable, 
she  should  complain  of  such  conditions  to  the  proprietor 
of  the  establishment  and  discuss  with  him  such  changes 
in  method  or  management  as  will  remedy  the  evil. 

"The  pure  food  law  will  not  have  secured  for  the  con- 
sumer every  benefit  which  its  wide  scope  comprehends  until 
the  very  vital  question  of  sanitary  handling  is  not  only 
understood  by  the  housewife,  but  brought  constantly  to 
the  attention  of  the  distributor. 

"A  few  years  ago  the  admirable  slogan,  'let  the  label 
tell  the  truth,'  was  used  most  effectively,  and  progressive 
food  manufacturers  saw  the  necessity  of  adopting  it  as 
their  motto.  But  the  time  has  not  yet  come  when  every 
manufacturer  is  a  willing  advocate  of  the  idea,  and  so  the 
consumer  must  constantly  study  labels. 

"She  must  look  for  suggestive  phrases  which  are  not 
warranted  by  the  goods  in  the  package;  she  must,  by  her 
own  inspection,  determine  whether  the  contents  of  the  can 
correspond  in  weight  to  the  statement  on  the  label;  she 
must  familiarize  herself  with  brands  and  with  manufac- 
turers; she  must  never  allow  her  judgment  to  be  influenced 
by  specious  advertising. 

"The  last  suggestion  and  perhaps  the  one  of  greatest 
value  is  that  the  housewife  know  that  under  the  law  of 
nearly  every  state  and  the  ordinances  of  nearly  every  city, 
she  has  the  authority,  as  a  consumer  and  citizen,  herself 
to  bring  evidence  of  adulteration  to  the  attention  of  inspec- 
tors and  food  officials.  She  should  know  these  men,  not 
merely  by  reputation,  but  by  actually  familiarizing  herself 
with  the  work  they  are  doing  in  her  community,  and  when- 
ever able  by  personal  word  or  through  her  club  bring  them 
in  touch  with  conditions  which  might  otherwise  escape 
their  notice. 

"She  should,  as  a  self-appointed  deputy  food  inspector, 
standing  between  her  family  and  the  agencies  which  manu- 
facture and  distribute  food,  see  to  it  that  the  pure  food 


30  CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

law  and  all  sanitary  regulations  are  kept  vital  and  ef- 
fective." 

It  is  quite  possible  that  some  housewives  may  find  the 
office  of  "self-appointed  deputy  food  inspector"  so  allur- 
A  market  in-  ^S  ^^^^  ^^^^  ^^^  want  more  specific  and  tech- 
spector's  in-  nical  instructions  as  to  how  to  proceed.  Such 
structions  information  is  contained  in  an  unsigned  article 
in  the  New  York  Times,  quoting  at  length  a  market  in- 
spector.^   The  article  closes  with  these  words: 

'  To  print  the  advice  on  all  articles  would  require  a  book  in  itself 
and  would  involve  no  little  technical  training.  Here  are  the  directions 
for  detecting  bad  fish: 

"Perhaps  there  is  nothing  about  which  a  housekeeper  should  be  so 
careful  in  summer  as  sea  foods.  Freshness,  of  course  is  the  prime  req- 
uisite. The  appearance  of  the  eyes  of  the  fish  gives  a  clear  indication 
of  freshness,  but  it  should  not  be  relied  upon  without  other  tests. 
If  fresh,  the  eye  will  be  prominent  and  full,  while  the  pupil  will  be 
dark.  This  condition  does  not  remain  long,  however,  for  soon  after 
being  caught  the  eye  becomes  gray  and  sunken,  though  in  aU  probabil- 
ity the  fish  is  still  fit  for  food.  The  collapsed  condition  of  the  eyeball, 
with  the  gray,  dull  appearance,  is  one  of  the  first  tests. 

"Fish  in  their  natural  state  have  red  gills.  So  if  the  gills  of  a  fish 
are  gray,  muddy  white,  or  of  a  greenish  tint,  you  are  right  in  avoiding 
it.  A  fish  that  is  full  scaled  and  with  scales  that  are  firm,  not  easily 
detachable  or  rubbed  off,  and  with  bright  and  glistening  appearance, 
may  generally  be  taken  as  being  fresh.  On  the  other  hand,  if  deficient 
in  scales,  or  if  they  easily  rub  off,  or  are  of  a  dull  color  and  dry  in  con- 
dition, the  fish  generally  is  getting  beyond  the  eating  stage. 

"When  a  fish  is  fresh  the  flesh  will  be  firm  and  elastic  to  the  touch. 
If  decomposition  is  present  the  fish  will  be  soft,  flabby,  and  will  'pit' 
deeply  under  pressure  from  the  finger.  If  in  good  condition  the  flesh 
is  not  easily  stripped  from  the  backbone,  neither  does  it  come  away  so 
clean  as  when  it  has  commenced  to  decompose.  If  the  housewife  will 
ask  it,  almost  any  dealer  will  strip  the  fish  enough  to  demonstrate  that 
it  is  fresh.  Another  test  is  to  hold  it  between  the  thumb  and  finger, 
exerting  a  moderate  pressure.  If  the  flesh  readily  parts  it  may  be 
considered  unsound. 

"The  importance  of  an  acute  sense  of  smell  in  testing  all  sea  food 
cannot  be  overestimated.  But  the  absence  of  any  putrid  smell  is  not 
always  a  safe  guide,  for  if  the  fish  has  been  kept  on  ice  it  may  smell 


ADULTERATION  AND  SHORT  MEASURE        3 1 

"While  it  is  often  trying  for  the  housewife  to  dress  and 
go  out  to  make  her  purchase,  it  is  much  safer  than  to  give 
the  day's  order  over  the  telephone  or  to  send  it  by  a  child 
or  servant.  For  it  stands  to  reason  that  the  woman  who 
is  on  the  ground  and  makes  her  own  choice  of  the  various 
foods  for  her  family  is  the  one  who  will  get  the  best,  if  she 
has  the  knowledge  to  choose  it.  The  fowl  or  meat  which 
is  just  a  Httle  'queer'  is  likely  to  go  to  the  home  where 
the  housewife  is  not  enough  interested  to  keep  a  close 
watch." 

The  situation  is  indeed  a  trying  one.  Our  federal,  state 
and  municipal  governments  are  commendably  awake  to 
the  importance  of  these  matters.  We  have  the  federal 
government  with  its  Pure  Food  and  Drug  Act  and  Meat 
Inspection  Law;  forty-eight  states  enacting  and  trying  to 
carry  out  pure  food  and  correct  measure  laws;  and  nu- 
merous cities  passing  ordinances  with  great  inconsistency 
in  the  various  acts  and  lack  of  uniformity  in  their  enforce- 
ment. But  when  we  realize  what  really  effective  inspection 
would  involve,  it  seems  a  hopeless  task  to  bring  about  the 
needed  reforms  under  the  present  conditions,  and  the  only 
one  who  is  always  happy  about  the  quality  and  measure 
of  what  he  buys  is  the  one  who  forgets  it. 

For  the  housewife  to  exercise  eternal  vigilance  as  to  the 
quahty,  cleanliness  and  quantity  of  everything  she  buys 
means  a  technical  knowledge,  willingness  to  spend  endless 
time  and  energy,  and  a  critical  attitude  on  her  part  which 
is  rare.  Moreover,  in  an  age  when  most  of  our  foods  are 
prepared  out  of  sight,  and  we  see  them  only  in  the  last  of  a 
long  series  of  stages,  inspection  by  the  individual  house- 
fresh  and  yet  change  rapidly  when  taken  off  the  ice,  while  the  fre- 
quent washings  given  by  some  dealers  to  fish  to  brighten  them  up 
has  a  tendency  to  keep  down  the  offensive  smell.  Difficulty  arises 
when  the  fish  is  between  the  fresh  and  putrid  stages,  and  the  degree 
of  odor  is  doubtful.  In  such  cases  there  is  nothing  to  do  but  subject 
the  fish  to  other  tests  and  form  a  decision  by  taking  them  collectively." 
Equally  specific  instructions  are  given  for  guarding  against  spoiled 
lobsters,  crabs,  oysters,  poultry,  meats  and  vegetables. 


32  CO-OPERATION  THE   HOPE   OF   THE  CONSUMER 

wife  is  bound  to  be  superficial ;  and  even  if  such  painstaking 
inspection  could  be  really  effective,  how  socially  wasteful 
it  is  for  each  family  to  devote  so  much  of  the  thought  and 
energy  of  its  household  head  to  this  purely  negative  busi- 
ness. 

Are  we  then  to  conclude  that  these  impure  food  and 
short  weight  evils,  because  they  have  not  been  adequately 
reached  by  the  negative  methods  of  legislation  and  inspec- 
tion cannot  be  reached  in  any  fundamental  way? 

There  is  an  old  story  of  a  green  servant  girl  who  for  hours 
mopped  up  the  water  which  overflowed  from  her  kitchen 
Our  distrib-  sink  before  it  occurred  to  her  to  turn  off  the 
Srroot  of Se  faucet.  Many  of  us  seem  to  be  taking  a  similar 
trouble  attitude  in  this  matter. 

Now  the  sole  responsibility  for  the  evils  of  adulterated, 
debased  and  diluted  goods  and  for  short  measure  in  all  its 
forms  is  inherent  in  the  underlying  principle  of  our  present 
distributive  system. 

The  producer  has  no  incentive  to  produce  a  thing  which 
appears  to  be  what  it  is  not.  It  is  only  when  the  producer 
becomes  seller  and  thus  initiates  the  process  of  distribution 
that  the  temptation  to  deceive  begins. 

To  the  perpetual  temptation  to  do  things  which  are  not 
to  the  interest  of  the  consumer  few  dealers  fail  to  yield 
Competition  more  or  less.  There  are  those  who  would  re- 
moving™  he^'  ^^™  ^^  y^^  accurately  a  quantity  of  uncounted 
difficulty  money,  who,  nevertheless,  conform  to  customs 
of  the  trade  by  which  the  consumer  is  the  loser.  And  the 
worst  of  it  is,  the  pace  is  set  by  the  dealer  who  gives  the 
purchaser  least  for  his  money,  and  this  pace  the  competitor 
must  follow  or  lose  out. 

Our  governments  can  furnish  the  instruments,  the  weap- 
ons, but  so  long  as  our  foods  are  prepared  out  of  sight, 
and  the  competition  for  profit  is  so  sharp,  complete  security 
of  the  consumer  seems  far  away.  When  the  processes  of 
preparation  go  on  in  the  dark,  and  the  profits  are  to  the  least 
scrupulous,  are  not  our  foods  for  a  long  time  destined  to 
cause  doubt  and  disquiet?    Shall  we  be  happy  to  feed  our 


ADULTERATION  AND   SHORT  MEASURE  33 

families  upon  foods  each  step  of  whose  preparation  has  in- 
vited degrading?  How  confident  can  we  be  that  we  have 
beaten  the  food  poisoner  at  his  own  game?  Is  it  not  in- 
herently obnoxious  to  permit  the  manipulator  with  wrong 
motives  to  come  between  the  original  source  of  our  food 
material  and  our  tables? 

So,  for  the  injury  to  health  of  the  million  who  eat  de- 
based foods,  for  the  vast  machinery  of  regulation,  for  the 
eternal  vigilance  necessarily  exercised  by  the  awakened 
buyers  and  for  the  immense  losses  sustained  by  buyers, 
the  present  distributive  system  is  to  blame. 

Short  Weights 

When  we  turn  to  the  subject  of  correct  measure  there 
is  the  same  melancholy  story.  The  Interstate  Grocer,  the 
most  widely  circulated  grocery  weekly,  constantly  carries 
in  bold  face  type,  at  the  head  of  its  editorial  page,  "Weigh, 
Count,  Measure  or  Gauge  Everything  You  Buy." 

Fraud  and  trickery  in  weights  and  measures  are  decreas- 
ing, says  former  Superintendent  William  L.  Waldron  of  the 
New  Jersey  ^  Department  of  Weights  and  Measures.  But  it 
is  still  found  necessary  to  condemn  and  confiscate  thou- 
sands of  pieces  of  equipment  each  year.  Mr.  Waldron  found 
11,545  druggists'  weights  wrong  out  of  42,251  tested. - 

The  bureaus  of  weights  and  measures  of  the  various 
states  confess  that  they  can  do  little  to  protect  the  con- 
sumers against  false  measures  except  to  place  the  law  in 
their  hands  and  expect  the  housewives  to  take  the  initia- 
tive in  watching  and  reporting  violation.  Books  and 
pamphlets  ^  are  issued  containing  many  and  minute  in- 

1  Report  of  the  Department  of  Weights  and  Measures,  State  of  New 
Jersey,  191 5. 

2  This  deception  is  not  always  intentional,  however;  IMr.  Waldron 
thinks  most  of  these  weights  were  used  through  ignorance. 

»"What  Every  Housewife  Should  Know,"  issued  by  the  New 
Jersey  State  Department  of  Weights  and  Measures. 

"What  the  Purchasing  Public  Should  Know,"  issued  by  the  Mayor's 
Committee  on  Food  Supply,  New  York  City,  1914. 


34  CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 


Some  Doctored  Measures 

Confiscated  by  the  Department  of  Weights  and  Measures  of  the  State  of 
New  Jersey 


ADULTERATION  AND   SHORT  MEASURE  35 

structions  all  based  upon  the  assumption,  apparently,  that 
women  can  be  brought  to  assume  the  attitude  of  distrust 
implied  in  the  directions  and  also  that  they  will  be  willing 
to  spend  the  time,  care  and  anxiety,  and  undergo  the  dis- 
agreeable experiences  incident  to  carrying  them  out. 

Here  are  some  samples  of  the  pages  of  "don'ts"  included 
in  these  booklets.  These  examples  are  quoted  from  Joseph 
Hartigan,  former  Commissioner  of  Weights  and  Measures 
of  New  York  City: 

"Some  Don'ts  for  Shoppers" 

Don't  let  your  butcher  weigh  the  paper. 

Don't  forget  to  look  for  the  weight  label  on  bread. 

Don't  let  the  butcher  put  his  body  against  the  balance  arm  of 

the  scale. 
Don't  be  careless  but  watch  the  computing  scale  closely. 
Don't  neglect  to  see  that  the  weight  of  flour  and  sugar  packages 

is  marked  on  the  container. 
Don't  let  the  dealer  remove  the  goods  from  the  scale  until  it 

comes  to  a  balance. 
Don't  forget  to  keep  a  scale  in  the  kitchen  and  test  the  weight 

of  all  you  buy. 
Don't  allow  the  dealer  to  weigh  in  the  wooden  butter  dish. 

This  is  important,  for  some  have  fancy  tin  edges  and  weigh 

from  one  to  three  ounces. 
Don't  let  fancy  packages  fascinate  you,  for  you  are  frequently 

paying  heavily  for  the  container  and  getting  less  of  the 

product. 
Don't  ask  for  a  cupful,  5  cents'  worth,  a  package,  a  handful,  a 

glass,  a  bag,  a  bucket,  or  a  bucketful  of  any  product.    Ask 

Former  Commissioner  Hartigan  of  New  York  writes,  under  date 
of  January  26,  191 7: 

"I  have  always  maintained  that  while  government  has  established 
agencies  at  the  expense  of  the  public  for  its  protection,  these  agents 
after  all  are  educational  in  the  very  phases  of  its  work,  and  the  final 
responsibility  for  the  detection  of  fraud  devolves  upon  the  individual 
consumer  to  change  the  principle  'let  lite  buyer  beware'  into  that  of 
'let  the  seller  beware.'    Every  consumer  should  be  his  o\va  inspector." 


36  CO-OFERATION   THE  HOPE   OF   THE   CONSUMER 

for  a  known  weight  or  measure.  Other  terms  mean  nothing 
in  the  law. 

Don't  buy  in  small  quantities  if  you  can  avoid  it. 

Don't  misunderstand  cheapness  for  economy. 

Don't  be  afraid  to  carry  a  bundle. 

Don't  gossip  with  your  dealer  while  he  is  weighing  your  pur- 
chases. This  is  one  of  the  many  practices  resorted  to  in  a 
dishonest  shop. 

Don't  be  ashamed  to  do  your  own  shopping  or  to  ask  questions. 

Don't  hesitate  to  notify  the  Bureau  of  Weights  and  Measures 
if  you  have  any  suspicions  whatever. 

One  especially  depressing  thing  about  false  measures  is 
The  poor  suf-  that  from  them  the  poor  suffer  most  since  they 
fer  most  from  are  most  likely  to  seek  "bargains"  where  they 
food,°short  are  apparent  but  not  real,  from  those  who  are 
weight  evUs  unscrupulous  enough  to  resort  to  fraudulent 
practices. 

But  here  again,  as  in  the  case  of  adulteration,  it  is  not 
from  the  cruder  forms  of  short  measure  that  consumers 
sufTer  most  (though  this  loss  is  estimated  in  the  millions), 
it  is  rather  in  buying  by  the  indefinite  package  or  basket 
or  asking  for  a  certain  number  of  cents'  worth  or  buying 
that  which  is  bulky  in  preference  to  better  value  in  more 
concentrated  form. 

The  Osborne  Commission,  which  reported  in  August, 
191 2  ^  was  especially  impressed  wdth  these  difficulties. 
On  page  32  of  this  report  we  find  that: 

"The  use  of  packages  and  canned  goods  leads  to  con- 
sideration of  the  necessity  of  protecting  the  public  as  to 
the  purity,  quality  and  weight  of  the  goods  sold.  Under 
the  sanction  of  a  State  law,  the  amount  of  water  in  canned 
goods  may  make  a  difference  of  10  to  20  per  cent  in  their 
value.  The  weight  of  food  in  a  package  is  usually  reduced 
so  that  10  ounces  or  12  ounces  is  given  for  an  alleged  pound. 

1  Report  on  Markets,  Prices  and  Costs  of  the  New  York  State  Food 
Investigation  Commission.  (William  Church  Osborne,  Chairman) 
August,  1912. 


ADULTERATION  AND  FALSE  MEASURE  37 

We  believe,  although  we  have  made  no  special  study  of  the 
subject,  that  there  are  grounds  to  consider  that  the  weights 
and  measures  both  of  farmers,  grocers  and  butchers  are  not 
always  above  suspicion." 

It  is  not  our  purpose  to  go  into  these  matters  of  adultera- 
tion and  short  measure  fully,  or  even  to  make  out  a  strong 
case  for  the  consumer,  but  rather  to  inquire  Anti-sodai 
whether  we  are  not  operating  under  a  false  position  of  the 
system  when  even  eternal  vigilance  fails  to  pro-  P'"'^**®  '^^  ^^ 
tect  the  consumer.  The  dealer  is  placed  under  circum- 
stances where  every  twist  and  de\ice  he  can  successfully 
employ  to  give  less  value  than  the  consumer  thinks  he  is 
getting  adds  to  his  profits.  Is  not  the  motive  arising  from 
this  situation  distinctly  anti-social? 

Many  dealers  believe  they  must  in  one  way  or  another 
get  the  better  of  their  customers  to  succeed  or  even  to 
survive.  Is  there  not  every  incentive  to  look  for  a  better 
way? 


CHAPTER  III 
THE  EXPENSIVE  MIDDLEMAN 

"Selling  cost  is  outrageously  high — manufacturing  cost  is  often 
small  beside  it.  Now  why  not  put  more  inventive  genius  to  work  upon 
the  big  problem  of  distribution?" — Thomas  A.  Edison. 

I  have  endeavored  to  point  out  how  the  present  distrib- 
utive system  works  against  the  interests  of  the  consumer 
and  how  certain  important  functions  which  we  should  de- 
mand of  a  proper  system  are  wholly  neglected.  In  this 
chapter  it  is  my  purpose  to  examine  the  excessive  cost  of 
such  service. 

The  distribution  of  a  commodity  includes  moving  it 
from  the  place  where  it  is  produced  to  the  place  where  it 
What  distri-  ^^  consumcd;  holding  and  caring  for  it  from 
bution  in-  the  time  it  is  produced  to  the  time  it  is  bought 
*^"  ®°  for  consiunption,  transferring  the  ownership  of 

the  commodity  from  that  of  the  producer  to  that  of  the 
consumer,  either  directly  or  through  one  or  more  inter- 
mediary dealers.  The  transfer  of  ownership  includes  all 
that  is  referred  to  as  selUng — making  known  the  nature 
and  merits  of  the  product  to  those  who  buy  it,  either  as 
dealers  or  consumers,  and  giving  to  buyers  assurances  as 
to  quality. 

This  enlightenment  of  buyers  about  products,  and  the 
giving  of  assurance  as  to  their  merits  introduces  a  non- 
physical  element  into  the  functions  of  distribution  which 
differentiates  the  problem  of  distribution  from  that  of 
physical  production.  This  psychical  element  materially 
comphcates  the  work  of  distribution  and  may  account  for 
the  fact  that  distribution  is  as  yet  less  efficient  and  eco- 
nomical. 

Distribution,  then,  is  here  used  to  cover  all  those  opera- 


THE   EXPENSIVE   MIDDLEMAN  39 

tions,  physical  and  psychical,  which  are  involved  in  trans- 
ferring commodities  from  the  place,  time  and  ownership  of 
production  to  the  place,  time  and  ownership  of  consumption. 
To  arrive  at  the  vast  proportions  of  this  problem,  let 
us  begin  by  making  a  rough  estimate  of  the  annual  cost 
of  goods  bought  at  retail  in  this  country  and  importance  of 
the  expense  of  transferring  them  from  producer  *^®  problem 
to  consumer.  Taking  as  a  basis  of  calculation  the  products 
which  are  annually  turned  out  by  American  farmers  and 
not  consumed  on  the  farm,  sent  to  factories,  or  exported, 
but  go  to  consumers  in  the  raw  state,  add  the  products  of 
manufactories  not  used  for  re-manufacture  or  export. 
Then,  starting  at  the  other  end,  take  as  a  basis  the  budgets 
of  requirements  of  working  men's  families.  Make  proper 
allowance  for  families  living  on  the  products  of  their  own 
farms,  on  the  one  side;  and  for  families  of  larger  income, 
on  the  other,  and  add  such  luxuries  as  automobiles  and 
musical  instruments.  By  this  method  I  reach  the  conclu- 
sion that  American  consumers  pay  for  goods  which  they  buy 
of  retail  dealers  something  like  $20,000,000,000  annually.* 

The  validity  of  the  arguments  here  made  is  not  at  all  contingent 
upon  the  accuracy  of  these  estimates.  The  figures,  for  which  there  are 
no  authoritative  data,  are  rather  given  to  indicate  the  vast  importance 
of  the  subject  and  to  furnish  a  starting  point.  (Since  the  above  es- 
timate was  made  I  notice  that  Theodore  H.  Price,  writing  in  the  Oul- 
look,  on  mail  order  houses,  has  arrived  at  the  same  figure.) 

The  Bureau  of  Personal  Service  of  the  Board  of  Estimates,  New 
York  City,  submitted  a  report,  April  16,  191 7,  as  to  the  necessary 
cost  of  living  for  an  average  family  of  five,  as  follows: 

1915  1917 

Housing $168.00  $168.00 

Carfare 30 .  30  3'^  ■3'^ 

Food 383.812  492. 3S8 

Clothing 104 .20  1 20. 10 

Fuel  and  light 42 .  75  46 .  75 

Health 20. 00  20 .  00 

Insurance 22 .  88  22 .  88 

Sundries 73  00  73  00 

Total  per  year $844,942  S980.418 


40  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

Considering  the  expenses,  profits,  and  charges  for  freight, 
cartage,  brokerage  commissions,  wholesalers',  jobbers'  and 
retailers'  profits,  it  is  probably  not  far  wrong  to  estimate 
that  one-half  of  the  retail  price  goes  for  distribution,^ 
roughly  in  the  following  proportions:  ^ 

The  average  individual  has  noticed  that  much  of  re- 
tailing is  slipshod  and  wasteful,  but  few  are  aware  that 
The  high  cost  ^^^  consumers'  bill  for  distribution  is  around 
of  distribu-  ten  billion,  or  half  the  retail  price  of  all  he 
^°^  buys,^  and  that  of  the  workingman's  commodity 

Of  this  S980.42,  about  S700  is  bought  at  retail.  If  each  of  our 
twenty  million  families  bought  the  same  amount,  this  alone  would  foot 
up  to  $14,000,000,000  per  year  as  the  bare  cost  of  living,  which  makes 
$20,000,000,000  seem  conservative  for  our  total  purchases  at  retail. 

1  "It  is  no  secret,"  says  the  Grocers'  Magazine,  "that  the  cost  of 
selling  almost  anything  is  far  more  than  the  cost  of  production." 

John  Maxwell,  for  twenty  years  president  of  the  great  Scotch  Co- 
operative WTiolesale  Society  of  Glasgow,  speaking  of  the  cost  of  100 
per  cent  of  the  factory  price  for  distribution,  says:  "Economy  in  pro- 
duction has  been  reduced  to  a  science,  while  all  that  is  saved  in  re- 
formed production  seems  to  be  wasted  in  unreformed  distribution." 
!» See  Annals,  American  Academy  of  Political  &  Social  Science, 
July,  1913,  "The  Cost  of  Living,"  for  table  (page  203)  giving  the 
price  received  by  the  producer  and  each  middleman,  etc.,  for  a  selected 
group  of  commodities. 

Amount  Per  Cent 
Producers,  farms,  manufacturers,  etc. .  .$10,000,000,000  50 
Railroads,   truckmen,   brokers,   commis- 
sion merchants,  etc 3,000,000,000  15 

WTiolesale  jobbers 2,000,000,000  10 

Retailers 5,000,000,000  25 

Total $20,000,000,000        100 

*  "In  these  figures  (cost  of  distributing  foods)  there  is  the  basis  for 
the  greatest  reform  that  this  country  or  any  other  has  ever  seen.  .  .  . 
I  have  contended  for  ten  years  that  some  day  this  task  must  be  accom- 
pUshed.  It  is  one  of  to-day's  big  jobs." — B.  F.  Yoakum. 
F.  E.  Ladd,  Food  Commissioner  of  North  Dakota,  says: 
"It  costs  more  to  distribute  our  food  products  than  it  does  to  pro- 
duce the  same.    Why  should  this  be?    Why,  for  example,  should  the 


THE  EXPENSIVE  MIDDLEMAN  4I 

budget  of  $600  ^  per  year,  according  to  prices  of  some 
years  ago,  one-half  was  the  charge  for  bringing  the  product 
to  him.  But  such  is  the  case.  And  of  the  $300  toll  which 
the  working  man  pays  for  distribution  probably  not  over 
one-tenth  is  for  freight. 

But  it  is  one  thing  again  to  call  attention  to  this  enor- 
mous tax  upon  the  consumer  and  another  to  point  out 
any  road  to  reUef.    In  fact,  since  distributive  Possibilities 
processes  have  in  this  country  been  for   the  °^  savings 
most  part  carried  on  under  free  competition  which  might 

producer  receive  31  per  cent  and  the  distributor  69  per  cent  of  the 
cost  paid  by  the  consumer  for  eggs?  Why  should  the  fanner  receive 
but  36.6  cents  on  every  dollar,  and  the  distributor  63.4  cents  on  every 
dollar  for  turkeys? 

"The  following  table  shows  the  per  cent  to  the  total  cost  paid  by 
the  consumer  that  goes  to  the  handlers  of  food  products,  the  balance 
going  to  the  farmers  or  producers: 

Per  Cent 

Poultry 55  •  I 

Eggs  by  the  dozen 69 .  o 

Celery  by  the  bunch 60. o 

Strawberries  by  the  quart 48  •  9 

Oranges  by  the  dozen 20 . 3 

Melons  by  the  pound 50 .0 

Potatoes  by  the  bushel 59-3 

Watermelons,  singly 33 . 5 

Turkeys 63 .4 

Cabbages  by  the  head 48.1 

Apples  by  the  bushel 55-6 

Apples  by  the  barrel 66 .  o 

Onions  by  the  peck 27.8 

Green  peas  by  the  quart 60 .  o 

Parsnips  by  the  bunch 60 .  o 

Turnips  by  the  bunch 60 .  o 

See  also  Report,  U.  S.  Department  of  Labor,  Bureau  of  Labor 
Statistics,  "Butter  Prices  From  Producer  to  Consumer,"  191 5. 

i"What  it  Costs  to  Live,"  by  William  B.  Wilson,  Secretary  of 
Labor,  Independent,  February  26,  IQ17,  Commodity  budget  estimated 
from  total  budget  given,  some  of  the  figures  for  which  are  not  up  to 
date. 


CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 


have  been  expected  to  lead  to  the  invention  of  adequate 
cost-saving  machinery  in  the  merchandizing  field,  is  there 
not  a  presumption  that  there  is  no  way  to  reduce  the  cost? 
Or  at  least  no  way  except  the  slow  process  of  a  little  saving 
here  and  a  little  there  as  new  detail  devices  may  be  adopted. 

The  purpose  of  this  book  is  to  set  forth  wherein  the  pres- 
ent system  is  fundamentally  at  fault,  and  to  point  out  a 
route  to  relief.  But  here  I  wish  merely  to  indicate  roughly 
the  possibility  of  affecting  savings  by  going  seriously  about 
it.  To  do  so  at  this  time  I  wish  simply  to  point  out  certain 
facts  bearing  upon  the  subject.  Let  us  first  consider  what 
the  saving  would  be  if  the  rate  of  gross  profit  charged  by 
the  most  efficient  stores  were  applied  to  all. 

The  Harvard  Graduate  School  of  Business  Administra- 
Grocers'  cost  ^^^^  ^  ^^^^  retailers  of  groceries  charging  profits 
of  doing  bus-  as  high  as  27.9  per  cent  and  as  low  as  14.6 
"^*^*  per  cent,  a  difference  of  13.3  per  cent. 

*  Graduate  School  of  Business  Administration,  Bureau  of  Business 
Research. 

(Bulletin  5)    Summary  Table  of  Percentages  and  Other  Figures 
FOR  Retail  Grocery  Stores 
(This  summary  includes  stores  which  sell  groceries  only,  and  also  stores 
which  sell  both  groceries  and  meats  and  provisions.) 

Standards  at- 
tained by  a 

group  of 

more  efficient 

stores 


Item 
(For  percentages,  net  sales  =  100%) 


Low     High    Common 


7c  %  %  % 

Gross  profit  on  merchandise 14.6  27.9  21.0            

Salaries  and  wages  of  buying  force ..  o.i  2.4  0.5             

Other  buying  expense 0.0  0.5  0.02           

Total  buying  expense o.i  2.4  0.5            

Salaries  and  wages  of  sales  force ....  3.5  10.6  6.5  5.0 

Advertising o.oi  1.8  0.1             

Wrappings  and  miscellaneous  selling 

expense 0.03  1.4  0.4  0.3 

Total  selling  expense 4.5  10.8  7.0  5.5 

Wages  of  delivery  force 0.6  3.5  1.5  1.0 

Other  delivery  expense 03  34  i-S  1° 

Total  deUvery  expense i.i  5- 9  3°  2.5 

Management  and  office  salaries ....  0.3  3.8  1.5            


THE   EXPENSIVE   MIDDLEMAN 


4.3 


What  if  half  this  reduction  could  be  made  in  the  total 
20  billion  budget!     The  saving  of  $2,400,000,000  would 

Standards  at- 
tained by  a 
group  of 
Item  more  efficient 

{For  percentages,  net  sales  =  100%)     Low     High     Common  stores 

%  %  %  % 

Office  supplies  and  expense o.oi  0.4  o.i  

Total  management  expense 0.4  4.0  1.7  

Rent 0.3  4.1  1.3  0.8 

Heat,  light  and  power o.i  0.8  0.2  0.15 

Insurance  on  stock  and  store  equip- 
ment   0.01  0.5  O.I  

Taxes o.oi  0.5  0.1             

Repairs  and  renewals  of  store  equip- 
ment   o.oi  1.4  O.I             

Depreciation  of  store  equipment.  ...  0.03  0.9  0.2             

Total  fixed  ^Jiarges  and  upkeep  ex- 
pense    0.8  5.6  2.0  1.5 

Telephone 0.04  0.6  0.2            

Ice  and  cold  storage: 

Groceries  only 0.01  0.6  0.1  0.1 

Groceries  and  meats  and  provisions  0.03  0.7  0.3  0.2 

Other  miscellaneous  expense 0.01  1.2  0.1             

Total  miscellaneous  expense 0.1  1.4  0.5  0.3 

Losses  from  bad  debts o.oi  2.2  0.5  0.2 

Total  of  expense  statement 10.4  25.2  16.5  13.0 

Net  profit  from  merchandise  opera- 
tions  Loss  3.3  II. o  2.5-5.5     

Interest 0.2  1.7  0.8             


Number  of  stock  turns  a  year: 

Groceries  only 3.5         23. 8         7.0  12.0 

Groceries  and  meats  and  provisions     7.0         26.4        9.0  14.0 

Average    annual    sales    per    sales- 
person     $5,000  $20,000  $10,000  


(Bulletin  9)    Operating  Expenses  in  the  Wholesale  Grocery 
Business,  Summary 


Item 

{For  percentages,  net  sales  =  100%) 


Low 


High    Common 


Gross  profit 7-7 

Total  sales  force  expense 0.93 

Advertising 0.0 

Other  selling  expense o.oi 

Total  selling  expense 12 


7o 

% 

17.2 

12.0 

4-3 

23 

1. 19 

0.07 

0.4s 

0.06 

4-53 

2-5 

44  CO-OPERATION  THE  HOPE  OF  THE   CONSUMER 

make  any  possible  savings  on,  for  instance,  the  railroad 
burden,  look  microscopic.^    I  believe  I  express  the  opinion 

Item 
{For  percentages^  net  sales  =  ioo%)  Low  High      Common 

%  %  % 
Salaries  and  wages  of  receiving,  warehouse  and 

shipping  force 0.43  2.0  1.15 

Packing  cases  and  wrappings o.oi  0.73  0.04 

Outward  freight,  express,  parcel  postage  and 

cartage o.oi  2.1  0.4 

Total  receiving,  handling  and  shipping  expense  ..0.8  3.22  1.6 

Salaries  of  buying  force o . 05  i . 05  0.35 

Other  buying  expense 0.02  o .  26  o . 03 

Total  buying  expense o. 05  i . 05  0.4 

Executive  salaries 0.16  1.21  0.5 

Office  salaries 0.19  1.54  0.7 

Postage  and  office  supplies o. 05  0.48  o.  23 

Telephone  and  telegraph o.oi  025  o. 05 

Credit  and  collection  expense o.oi  0.57  0.06 

Other  management  expense 0.02  0.42  o.i 

Total  general  management  and  oflQce  expense. .  1.15  3.15  1.65 

Total  interest 0.4  3.03  1.5 

Rent 0.17  1.05  0.4 

Heat,  light  and  power 0.01  0.2  0.05 

Taxes 0.02  0.75  0.2 

Insurance  (except  on  buildings) 0.03  0.58  o.ii 

Repairs  of  equipment o.oi  0.49  0.05 

Depreciation  of  equipment o.ooi  0.5  o.i 

Total  fixed  charges  and  upkeep  expense 1.31  4.62  2.5 

Miscellaneous  expense o.oi  0.92  o.ii 

Losses  from  bad  debts 0.002         1.66  0.3 

Total  expense 6.7  13  •  74  95 

Net  profit Loss  1. 13     7.01  2.4 

Stock  turn 2.8         11. 6  5.7 

Note  the  diflference  of  9.5  per  cent  on  the  cost  of  handling  goods 
by  the  most  and  least  efhcient  wholesale  grocers.  It  is  conceivable 
that  a  community  might  be  served  by  high  per  cent  retailers  who  also 
bought  their  goods  of  high  percentage  wholesalers,  while  another  com- 
munity might  be  supplied  by  low  percentage  retailers  and  wholesalers. 
If  so,  the  difference  in  the  cost  of  living  between  the  one  community 
and  the  other  would  be  24  per  cent,  or,  say,  around  $100  a  year  on  the 
working  man's  food  bill. 

'  This  is  assuming  that  there  exists  as  great  a  percentage  of  dif- 
ference between  the  extremes  of  cost  of  doing  business  in  lines  other 
than  groceries,  and  probably  the  difference  is  even  greater. 


THE  EXPENSIVE  MIDDLEMAN  45 

of  conservative  students  of  the  problem  when  I  say  it  is 
entirely  possible  to  reduce  the  retail  price  of  commodities 
in  this  country  on  the  average  from  ten  to  twenty  per  cent 
if  merely  the  known  leaks  between  producer  and  consumer 
were  stopped.  The  opinion  is  so  general  that  the  cost  of 
distribution  is  away  beyond  reason  that  we  need  not  dwell 
here  upon  the  subject.  The  typical  view  of  the  profes- 
sional economists  is  that  of  Professor  Taussig:  ''No  part 
of  the  mechanism  of  the  dixdsion  of  labor  is  so  inefficient 
as  that  of  ordinary  retail  trading  on  a  small  scale.  Or,  as 
representing  the  opinion  of  keen  and  far  seeing  men  who 
are  students  of  business  affairs  generally,  we  may  quote 
further  from  Thomas  A,  Edison,  quoted  by  Printer's  Ink 
as  saying: 

Selling  and  distribution  are  simply  machines  for  getting 
products  to  consumers.  And  like  all  machines  they  can  be  im- 
proved with  great  resulting  economy. 

But  it  is  the  plain  truth  that  these  machines  for  distribution 
have  made  the  least  progress  of  all  machines.  They  are  the 
same  in  many  instances  that  they  were  forty  and  fifty  years 
ago.  They  are  imitations  of  each  other,  and  manufacturers 
follow  each  other  like  sheep  in  the  matter  of  selling  and  dis- 
tribution, the  very  same  manufacturers,  ofttimcs,  who  are 
tremendously  keen  to  secure  the  benefits  of  new  invention  in 
their  factories. 

As  a  result  selling  cost  is  outrageously  high— manufacturing 
cost  is  often  small  beside  it.  Now,  why  not  put  more  inventive 
genius  to  work  upon  the  big  problem  of  distribution?  At  this 
time  of  general  lamentation  over  high  prices  it  is  particularly 
desirable.  The  average  selling  machine  has  become  unwieldy 
and  ancient.  Did  you  ever  see  the  Jacquard  loom?''  It  is  mar- 
velous how  perfectly  and  simply  it  performs  complicated  weav- 
ing of  patterns.  That  perfect  the  selling  machine  should  be — 
getting  goods  quickly,  economically  and  satisfactorily  to  those 
who  want  them. 

Mr.  William  Church  Osborne,  chairman  of  Ex-Governor 


46  CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

Glynn  Food  Commission,  in  a  letter  to  the  New  York 
Times  of  July  14,  1913,  said: 

"It  is  my  deliberate  judgment  that  the  city  in  conjunc- 
tion with  its  citizens  can  save  upon  the  distribution  of  food 
supplies  over  $50,000,000  per  annum,"  and  that  saving 
on  foods  which  then  cost  the  consumer  $500,000,000  could 
be  made  without  displacing  the  system  of  retailing  then 
and  now  in  use. 

It  is  not  my  purpose  to  follow  the  circuitous  course  of  a 
commodity  from  producer  to  consumer  with  the  hope  of 
locating  specific  leaks  and  finding  specific  remedies  for 
each,  but  rather  to  show  certain  general  sources  of  waste. 

General  Sources  of  Waste 

It  is  often  claimed,  that  the  mere  presence  of  a  number 

of  middlemen  in  the  distributive  process  proves  that  there 

Mere  number  ^""^  ^°^  many  profits  to  pay  and,  therefore,  un- 

of  middlemen  nccessary  expense.     This  does  not  always  fol- 

impor  an  |^^     j^  ^^^  1^^  ^l^^^  j^  j^  more  economical  for 

one  house  to  sell  a  consignment  of  produce  on  commission 
to  a  jobber  and  the  jobber  in  turn  sell  to  retailers  than 
for  one  house  to  undertake  to  receive  from  the  farmer  and 
also  job  to  retailers.  It  is  quite  possible  that  it  will  cost 
the  two  houses  less  to  perform  the  twofold  service  than 
it  would  one  house.  The  false  assumption  that  the  elimina- 
tion of  a  middleman  is  necessarily  a  reduction  of  the  cost 
of  doing  the  middlemans'  work  is  responsible  for  the  epi- 
demic of  public  or  farmer's  markets  from  time  to  time. 
It  generally  turns  out  that  the  farmer  cannot  do  this  re- 
tailing work  as  well  nor  as  economically  as  a  trained  re- 
tailer. I  have  yet  to  hear  of  a  farmer's  retail  market  which 
permanently  benefited  either  farmers  or  consumers.  When 
the  free  advertising  due  to  novelty  is  over,  the  farmer's 
prices  gradually  rise,  his  customers  become  correspondingly 
fewer,  until  the  enterprise  peters  out.  Nor  is  it  certain 
when  charges  seem  high  to  the  producer  or  the  consumer 
that  they  are  necessarily  high. 


THE   EXPENSIVE  MIDDLEMAN  47 

Perhaps  there  is  no  way  to  get  perishables  from  farmer 
to  consumer  for  less  than  65  per  cent  of  the  retail 
price.  ^ 

The  real  test  is  to  do  these  things  or  get  them  done  and 
the  same  service  performed  for  less  than  these  xhe  test  of 
charges.     It  is  not  a  case  for  scolding  and  fiery  P^^^y  ^^'^.- 

%  ,      .  .  T    •  ^    ice  IS  to  give 

speech  and  resolutions  at  meetmgs.  It  is  a  case  same  service 
for  invention.  The  thing  is  to  find  a  better  way.  ^°'  i^^s  money 
The  string  of  men  between  the  farmer  and  the  consumer 
suggests  the  time  before  Commodore  Vanderbilt  when 
what  is  now  the  New  York  Central  Railroad  was  half  a 
dozen  short  lines,  some  of  narrower  gauge  than  others,  so 
that  between  Chicago  and  New  York  goods  had  to  be 
transferred  a  number  of  times  from  car  to  car.  When  the 
road  was  unified  the  cost  of  moving  a  barrel  of  flour  from 
New  York  to  Chicago  was  greatly  reduced.^ 

Every  time  a  product  changes  ownership  it  must  be  in- 
spected and  perhaps  guaranteed,  an  expense  analogous  to 

*In  a  speech  delivered  in  1912  E.  E.  Pratt,  chief  statistician  of 
Governor  Dix's  State  Food  Investigating  Commission,  pointed  out 
that  much  of  New  York's  food  passes  through  four  hands  before  it 
reaches  the  consumer.  He  believed  that  this  system  can  be  greatly 
improved. 

L.  D.  H.  Weld,  Ph.  D.,  Professor  of  Business  Administration  in 
Yale  University,  in  an  exhaustive  work,  The  Marketing  of  Farm 
Products  (Macmillan)  claims  that  there  is  no  good  reason  for  alleging 
that  there  are  too  many  subdivisions  or  steps  of  the  distribution 
process,  that  "lower  cost  and  greater  eflkiency  may  be  gained  by 
further  specialization,"  that  "those  who  have  made  first  hand  in- 
vestigations of  the  marketing  system  in  an  impartial  and  unprejudiced 
way  realize  that  the  system  of  marketing  that  has  developed  is  effi- 
cient." This,  however,  does  not  refer,  we  take  it,  to  the  question  of 
whether  there  are  too  many  competitors  in  any  one  branch  of  mar- 
keting. 

*  "He  (Vanderbilt)  consolidated  and  perfected  the  railroad  service 
in  such  a  way  that  a  year's  supply  of  meat  and  bread  can  be  moved 
1000  miles  from  the  western  prairie  to  the  eastern  workshops  at  the 
measure  of  cost  of  a  single  day's  wages  of  a  mechanic  in  Massachu- 
setts."— Edward  Atkinson,  Distribution  of  Products. 


48 


CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 


this  transferring  of  freight.     There  may  also  be  physical 
transfer  of  the  goods,  but  in  any  case  each  sale  from  one 


Main  Channels  of  Distribution  for  Fruits  and  Vegetables 
U.  S.  Department  of  Agriculture,  Bulletin  267,  Page  22 

handler  to  another  incurs  a  certain  expense  which,  unless 
it  makes  for  final  economy,  should  be  cut  out. 


THE  EXPENSIVE   MIDDLEMAN  49 

This  points  to  one  of  the  greatest  sources  of  expense  in 
the  modern  process  of  distribution,  namely,  the  lack  of 
proper  grading  and  sorting  on  the  part  of  Lack  of  proper 
farmers  or  other  producers.  At  present,  in  grading 
the  case  of  many  products,  every  sale  between  the  producer 
and  the  consumer  is  against  the  obstacle  of  ignorance,  un- 
certainty or  suspicion  on  the  part  of  the  purchaser  as  to 
the  grade  and  quantity  of  what  he  is  buying.  The  farmer 
may  sell  to  his  local  buyer  a  product  which  is  not  sorted 
and  graded.  The  local  buyer  may  either  grade  or  consign 
to  the  city  to  be  graded.  The  grade  made  by  the  commis- 
sion man  may  be  good,  may  carry  confidence  to  the  jobber, 
but  then  the  jobber  must  create  in  the  retailer  confidence 
in  the  product.  The  retailer  must  show  and  convince  the 
consumer.  Each  transaction  incurs  the  expense  of  costly 
salesmanship  and  bargaining.  I  am  convinced  costiy  and 
that  too  Httle  attention  has  been  given  to  this  unproductive 
selling  against  the  obstacles  of  well  warranted  formed  ^over 
distrust  as  an  element  of  cost  in  marketing.  ^'^  °^®^ 
That  large  expense  is  incurred  by  this  haphazard  grading 
is  evident  when  we  compare  such  with  well  standardized 
products  Kke  wheat. 

Another  thing  to  be  said  in  this  connection  is  that  after 
a  product  leaves  the  possession  and  care  of  the  farmer  it 
is  orphaned,  so  to  speak,  until  it  reaches  the  ownership  of 
the  final  consumer.  No  one  who  handles  it  has  any  direct 
interest  in  keeping  down  the  cost.  If  an  expensive  thing 
is  done  by  all  dealers,  the  dealers  have  no  incentive  to  avoid 
it.  If,  for  example,  all  dealers  were  required  by  law  to 
ship  all  products  from  New  York  to  Philadelphia  and 
back,  there  would  be  no  objection  on  the  part  of  the  dealers.^ 

'"Under  the  system  of  private  treaty  and  commission  sales,  still 
principally  in  use,  the  producers  are  restive  and  indignant,  and  the 
nearby  sources  of  supply  are  dormant  and  drying  up.  Albany  does 
not  receive  one-fourth  of  her  butter,  eggs,  chickens  or  veal  from  the 
excellent  farm  lands  around  the  city.  New  York  gets  its  best  veg- 
etables from  the  most  distant  points.  Buffalo  is  mainly  fed  from  the 
west." — Osborne  Commission  Report,  page  6. 


50  CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

If  the  very  uncertain  pressure  of  competition  could  be 
relied  upon  to  prevent  this,  there  would  be  no  such  problem 
as  we  are  now  discussing. 

Competition  so  often  fails  to  work  when  most  needed 
that  little  dependence  can  be  placed  upon  its  influence  to 
Competition  protect  produccr  or  consumer.  While  the 
fails  when  orphaned  product  is  on  its  winding  way,  it  is 
most  nee  e  gubject  to  assaults  of  glut,  rot  and  speculation. 
It  is  when  fruit  and  vegetables  are  plentiful  on  the  farm 
that  the  most  shameful  wastes  occur.  The  food  is  per- 
mitted to  rot  in  large  quantities  either  on  the  farm  or  in 
the  city — while  prices  to  the  consumer  are  httle  less  than 
normal.^  Why?  Because  the  products  must  pay  freight, 
cartage,  and  a  string  of  profits,  and  these  profits  dam  the 
flow  from  farm  to  kitchen.  Here  is  where  it  becomes  most 
conspicuous  that  not  the  need  of  the  consumer  but  the 
profit  of  the  dealer  is  the  power  that  moves  the  machinery 
of  distribution.  Of  the  wastefulness  of  the  present  ways 
of  handling  fruits  and  vegetables  Mr.  Morris  Weslowsky, 
a  prominent  New  York  Commission  merchant,  says: 

"New  York's  price  trouble,  and,  to  a  less  degree,  the 
price  trouble  in  most  American  cities,  is  due  to  wasteful 
marketing  upon  the  seller's  part  and  wasteful  purchasing 
upon  the  buyer's  part,  with  wasteful  handling  sandwiched 
in  between." 

It  would  be  interesting  and  appalling  to  know  how  much 
good  food  is  wasted  every  year  simply  because  a  so-called 
"over-supply"  means  low  prices  and  low  profits  to  the 
dealer,— and  profits  come  first. 

'  As  recently  as  May  lo,  1917,  there  appeared  in  the  New  York  Mail 
an  article  to  the  efTcct  that  because  of  the  glut  in  fresh  vegetables 
vast  quantities  of  string  beans,  artichokes,  cauliflower,  kale,  squash, 
eggplant  and  strawberries  were  thrown  away.  This  is  frequently 
done  when  the  market  is  "off."  Food  is  allowed  to  spoil  and  is  then 
dumped  into  the  river,  while  a  certificate  is  sent  to  the  shipper  to  the 
effect  that  the  produce  arrived  in  a  condition  unfit  for  use!  It 
thus  often  happens  that  when  the  supply  is  most  ample,  prices 
are  up. 


THE   EXPENSIVE  MIDDLEMAN  5 1 

The  cold  storage  warehouse  is  a  great  invention  for 
carrying  over  products  from  the  time  of  plenty  to  the 
time  of  greatest  scarcity,  thereby  facilitating  ^j^^  ^.^j^ 
the  even  distribution  of  foods.  It  is  important  storage  ware- 
for  the  consumer,  however,  that  cold  storage  °"^^ 
also  makes  possible  speculation  and  cornering  of  the  market 
in  time  of  scarcity. 

In  the  winter  of  19 16-17  ^ggs  were  so  scarce  and  high 
that  certain  women's  organizations  suspected  that  there 
was  a  corner  and  instituted  a  boycott.  Here  is  what  the 
chief  offender  has  to  say  about  it  as  reported  in  a  current 
newspaper : 

"James  E.  Wetz,  so-called  'Egg  King'  of  Chicago,  who, 
it  was  reported,  had  cornered  the  egg  market,  has  an- 
nounced the  abdication  of  his  throne  after  making  a  cool 
million,  and  will  take  his  family  to  Florida  for  the  winter 
to  enjoy  the  fruits  of  his  campaign.  Wetz  claims  that  the 
'egg  boycott'  instituted  by  the  women's  organizations  of 
Chicago  resulted  in  a  greater  consumption  of  eggs  by  mak- 
ing egg  eating  'aristocratic' 

"  'I  thank  the  Housewives'  League  of  Chicago  and  numer- 
ous others  who  sought  by  proclamation  of  a  boycott  to 
lower  the  price  of  eggs,'  Wetz  declared. 

"'They  made  folks  think  it  was  aristocratic  to  eat  eggs. 
Everybody  wants  to  be  aristocratic.  Prices  jumped. 
I  made  a  million.  I  ought  to  allow  the  originators  of  the 
boycott  a  commission.'" 

As  before  stated,  it  is  not  my  purpose  to  catalogue  all 
the  causes  of  cost  and  waste  incident  to  the  present  distribu- 
tive system,  but  simply  to  point  out  the  adverse  influence 
of  the  present  order  of  distribution. 

As  I  have  already  said,  much  of  the  expense  of  distribut- 
ing farm  products  is  due  to  the  lack  of  standardization  of 
qualities  and  grades  so  that  each  buyer,  whether  dealer  or 
consumer,  is  uncertain  as  to  what  he  is  getting.  In  the 
case  of  manufactured  products  a  plan  has  been  adopted 
during  the  past  few  decades  to  overcome  this  uncertainty 
to  a  great  extent.    This  is  done  by  branding  and  advertis- 


52  CO-OPEllATION  THE   HOPE   OF  THE  CONSUMER 

ing.  The  maker  of  a  breakfast  food,  a  pair  of  shoes  or  a 
talking  machine  sells  his  product  under  a  certain  name 
and  identifying  marks.  When  the  consumer  buys  one  of 
these  articles  and  it  is  found  to  be  satisfactory,  he  can  call 
for  and  get  the  same  article  when  he  wishes  to  buy  again. 
This  practice  of  identifying  an  article  with  the  manufac- 
turer's name  is  not  new.  The  Seth  Thomas  clock,  Torry 
razor  strop,  and  many  other  such  articles  were  known  and 
called  for  by  name  fifty  years  ago.  But  more  recently  the 
practice  has  been  extended  to  articles  which  must  be  put 
up  in  packages. 

What  has  given  the  great  impetus  to  such  branding  of 
separate  articles  and  packaged  goods,  however,  is  adver- 
Package  vs.  tising.  The  growth  of  the  advertising  method 
bulk  goods  of  marketing  goods  under  trade-mark  has  been 
very  rapid  during  the  past  twenty-five  years.  It  is  not  at 
all  uncommon  for  a  single  concern  to  spend  in  advertising 
alone  hundreds  of  thousands  of  dollars  per  year,^  and  the 
total  expense  for  advertising  of  this  kind  in  the  country 
amounts  to  hundreds  of  millions  per  year.  There  has  been 
much  discussion  of  late  as  to  how  far  consumers  are  bene- 
fited by  this  method  of  marketing  and  how  far  they  are 
burdened  by  the  extra  price  charged  for  the  packaged  and 
advertised  goods. ^  The  subject  has  been  discussed  by 
Congress  after  receiving  much  testimony  and  is  very  gen- 
erally gone  into  by  food  investigating  committees. 

1  For  many  years  the  Royal  Baking  Powder  Company  spent 
$750,000  a  year  for  advertising,  and  William  Ziegler,  principal  owner, 
left  a  fortune  of  $30,000,000. 

A  government  report  says  the  Tobacco  Trust  spent  for  advertising 
in  19 10,  $11,000,000,  and  that  the  companies  succeeding  the  Trust 
spent  for  advertising  in  1913,  $23,000,000. 

The  Proctor  and  Gamble  Company  recently  testified  that  they 
spent  $3,000,000  in  five  years  to  put  "Crisco"  on  the  market. 

The  American  Sugar  Refinery  Company  have  just  appropriated 
$1,000,000  for  "trade-mark"  advertising. 

'  An  attempt  is  being  made  to  fix  the  price  of  these  goods.  See 
Hearings  on  H.  R.  13,568, — "Regulation  of  Prices." 


THE   EXPENSIVE   MIDDLEMAN  53 

In  191 2  the  Osborn  Food  Commission  said:  ''While 
it  is  the  general  testimony  of  the  provision  dealers  who 
watch  costs  most  closely  that  the  use  of  packages  adds 
from  50%  to  100%  to  the  cost  of  goods,  it  is  also  true  that 
the  public  has  been  quite  unable  to  withstand  the  bom- 
bardment of  advertising  by  the  large  firms  dealing  in  pack- 
age goods,  and  that  they  are  firmly  convinced  of  the  pe- 
culiar merit  and  quality  of  goods  in  a  package,  although 
the  same  goods  can  be  obtained  in  bulk  at  the  same  store 
at  one-half  the  price." 

Mr.  George  W.  Perkins,  chairman  of  the  joint  food  com- 
mission of  New  York  City  and  New  York  State,  has  sent 
out  hundreds  of  thousands  of  circulars  in  which  he  advises 
housewives  against  the  extravagance  of  buying  packaged 
goods. 

On  the  other  side  of  the  question  it  is  urged  that  adver- 
tising,  by  increasing   the  output  and   thus  lowering  its 
production  cost  per  unit,  does  not  necessarily  Advertising 
increase  the  price  of  the  product  to  the  con-  does  not  ai- 
sumer,  and  that  even  when  it  does  the  consumer  the^cos°7o^the 
frequently  gets  an  assurance  of  quality  and  consumer 
uniformity  worth  the  extra  cost.    A  number  of  makers  of 
advertised  goods  testify  at  this  time  of  excessively  high 
prices  that  not  only  have  their  prices  to  consumers  not  been 
advanced,  but  in  spite  of  the  increased  cost  of  labor  and 
materials,  costs  to  the  consumer  have  even  been  reduced 
by  advertising.    This  is  undoubtedly  true  in  many  cases. 
The  maker  of  a  dollar  watch  claims  that  such  a  watch 
could  not  be  produced  and  sold  for  one  dollar  if  it  were 
not  for  advertising  and  the  large  demand  thus  created. 

The  facts  are,  however,  that  advertising  costs  money 
and  there  is  no  one  to  pay  for  it  finally  but  the  consumer. 
So,  while  the  demand  and  output  thus  increased  may  make 
possible  lower  cost  of  manufacture,  if  the  demand  could 
be  created  without  the  advertising  expense,  and  the  saving 
given  to  the  consumer,  he  would  be  decidedly  the  gainer. 
A  big  clothing  manufacturer  has  reduced  not  only  his 
manufacturing  cost  but  also  his  percentage  of  selling  cost 


54  CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

through  a  selling  policy  based  upon  advertising  to  reach 
the  consumer.  The  fact  remains,  however,  that  his  selling 
expense  includes  7  per  cent  for  advertising  and  3  per  cent 
for  travelling  salesmen,  a  total  of  10  per  cent  for  pushing 
the  goods  upon  the  consumer.  The  question  arises  whether 
the  consumer  is  helped  to  an  extent  to  justify  his  paying 
the  10  per  cent.  Of  course,  the  answer  to  that  question 
depends  upon  what  is  the  alternative  course. 

What  of  the  proprietary  staple  goods  which  are  greatly 
enhanced  in  price  on  account  of  packaging  and  advertis- 
ing? It  is  quite  possible  that  the  consumer  may  prefer  to 
buy  these  packaged  and  guaranteed  goods  at  the  increased 
price  of  forty,  fifty  per  cent  more  for  the  sake  of  the  assur- 
ance of  quality,  cleanliness  and  other  merits  which  he  be- 
lieves unobtainable  by  any  other  methods.  But  need  he 
pay  the  extra  price  in  order  to  get  these  assurances? 

Reliable  testimony  has  recently  been  given  that  packaged 
and  advertised  breakfast  foods  with  fancy  names  are  iden- 
tical with  bulk  cereals  which  can  be  bought  in  the  market 
for  much  less  than  the  price  charged  in  packages.  By  the 
use  of  automatic  machinery  bulk  goods  can  be  weighed 
Sales  pushing,  and  packaged  at  very  low  cost;  ^  indeed,  the 
packagmgl^^  greater  expense  of  the  carton  as  compared  with 
costs  '  paper  and  string  is  wholly  offset  by  the  extra 
time  taken  by  the  salesman  and  the  overweight  often  given 
in  doing  up  bulk  goods  by  hand.  So  the  extra  cost  of 
packaged  goods  is  not  a  mechanical  cost  but  an  advertising 
and  sales-pushing  cost. 

The  question  I  wish  to  raise  here  is  whether  the  whole 
great  expense  of  sales  stimulation,  product  pushing  aside 
from  the  mere  enlightenment  of  the  public,  cannot  be  dis- 
pensed with  on  the  part  of  the  consumer  with  great  finan- 
cial gain  and  no  net  loss.  The  consumer  needs  all  the  in- 
formation he  can  get  about  things  he  has  to  buy.  He 
should  have  much  more  light  than  he  now  gets,  and  it 
should  be  made  more  available  and  be  vouched  for  in  a  more 

'  The  "All  Package  "  Grocery  Company  of  New  York  and  Brooklyn 
has  extensively  demonstrated  this. 


THE  EXPENSIVE  MIDDLEMAN  55 

disinterested  way.  But  the  enormous  expense  incurred  to 
push  products  upon  him  by  all  the  arts  of  the  printed  and 
spoken  word  he  could,  I  believe,  get  along  without. 

To  these  heavy  expenses  to  be  paid  by  the  consumer 
under  the  present  system  must  be  added  an-  The  consumer 
other  heavy  burden— I  mean  the  excessive  cost  ^"f  Jf^"om- 
of  the  duplication  many  times  over  of  all  these  peUtion 
processes  caused  by  unrestrained  and  wasteful  competition.^ 

Nor  are  the  evils  of  competition  limited  to  a  needless 
duplication  of  selling  machinery.  Behind  this  is  the  need- 
less duplication  of  producing  plants.  Here  also  the  con- 
sumer public  pays  the  bill.  I  am  told  by  parties  in  a  posi- 
tion to  know  that  in  certain  lines  of  manufacture  there  is 
several  times  the  capacity  needed  to  produce  the  required 
product, 2  and  that  each  unit  of  product  is  charged  with 
its  proportion  of  all  the  idle  plant. ^  And  so  the  consumer 
pays  many  big  bills  incurred  out  of  his  sight  which  he  has 
no  power  to  eliminate,  and  a  burden  which  competition, 
far  from  alleviating,  actually  aggravates. 

I  have  been  told  by  the  manufacturer  of  a  dollar  watch 
that  his  watch  cost  more  to  manufacture  than  did  a  certain 

>  High  prices  tempt  additional  dealers  to  come  to  the  town,  the 
average  profit  is  reduced  accordingly,  until  it  occurs  to  some  of  them 
that  they  are  not  making  a  large  enough  average  profit  and  the  tend- 
ency is  in  one  way  or  another  to  get  enough  higher  prices  to  bring  the 
profits  back  to  the  former  average,  and  it  hardly  need  be  said  that  all 
these  duplicate  establishments,  incurring  duplication  of  expense,  are 
charged  in  the  long  run  to  the  consumer. 

« In  an  article  in  the  New  York  Times,  March  15,  1917,  summarizing 
last  year's  business  of  the  American  Sugar  Refining  Company,  Mr. 
Babst,  the  president,  is  quoted  as  follows: 

"In  view  of  the  well  known  fact  that  the  United  States  is  already 
provided  with  refining  capacity  sufticient  to  meet  the  growth  of  the 
country  for  many  years,  it  is  interesting  to  note  an  addition  being 
made  to  this  surplus  capacity  by  the  early  completion  by  new  interests 
of  a  new  refinery  at  Savannah  and  the  pkns  for  a  prospective  refinery 
at  Boston.  The  beet  sugar  industry'  is  also  contributing  additional 
capacity,  as  seven  new  plants  have  been  slicing  during  the  current 
season  and  at  least  twenty  additional  plants  are  reported." 


56  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

razor  sold  for  several  dollars.  While  it  may  be  a  matter 
of  debate  whether  certain  classes  of  commodities  are  en- 
hanced in  price  by  advertising,  there  is  no  doubt  that  ad- 
vertising exercises  a  power  over  the  consumer  which  makes 
it  possible  to  charge  a  price  for  widely  advertised  articles 
far  beyond  what  the  cost  of  production  would  justify, 
Unorganized  ^.nd  what  the  consumcr  should  pay.  It  is  a 
consumers  no  case  whcrc  thousands  of  consumers  acting  in- 
ganized  pro-  dividually  are  no  match  for  the  national  mar- 
ducers  keter  acting  as  a  unit.    And  under  the  presenj: 

distributive  system  there  is  no  way  to  reach  this  class  of 
practical  monopolists. 

The  Wholesaler  and  Jobber 

Wholesalers  and  jobbers — words  used  here  as  practically 
synonymous — receive  their  supplies  from  numerous  sources 
and  sell  them  to  retailers.  Among  those  who  sell  to  the 
wholesaler  and  jobber  are  the  produce  commission  mer- 
chants, manufacturers  and  importers,  the  brokers  repre- 
senting associations  of  growers,  and  numerous  others. 
The  wholesale  house  is  the  clearing  house  buying  supplies 
from  hundreds  of  concerns.  The  wholesaler  may  receive 
but  a  single  product  from  one  house  and,  to  make  up  his 
supply,  he  may  search  all  over  the  face  of  the  earth.  He 
Wholesaler  to  ^^^^  ^^^^^  numerous  articles  to  the  retailer, 
some  extent  often  in  small  quantities  of  each.  The  whole- 
ehmmated  ^^^qx:  may  receive  products  in  car  lots  from 
hundreds  of  houses  and  sell  in  case  lots  to  thousands  of 
retailers. 

There  has  been  some  discussion  of  late  as  to  whether 
the  wholesaler  could  not  be  dispensed  with  at  a  saving  to 
the  consumer.  Many  large  retailers,  like  department  stores, 
chain  stores,  mail  order  houses,  are  largely  or  wholly  their 
own  wholesalers.  When  the  chain  stores  act  as  their  own 
wholesalers  they  maintain  warehouses  to  which  goods  are 
brought,  broken  up  into  small  quantities,  and  delivered  to 
the  multiple  retail  stores. 

Groups  of  retailers  often  form  what  are  called  buying 


THE   EXPENSIVE  MIDDLEMAN  57 

exchanges  which  perform  for  their  members  much  the 
same  functions  that  these  warehouses  perform  for  chain 
store  companies.  This  movement  appears  to  be  on  the 
increase  with  retail  dealers  seeking  to  get  their  goods  at 
lower  cost  to  meet  the  competition  of  chain  stores. 

It  is  to  be  noted,  however,  that  these  warehouses,  either 
for  chain  stores  or  for  groups  of  other  retailers,  do  not  per- 
form the  same  selling  function  as  does  the  regular  whole- 
saler or  jobber.  The  warehouse  may  buy  its  goods  at  the 
same  price  as  or  even  lower  than  the  wholesaler  pays  and 
from  the  same  source.  Of  course  this  is  the  aim.  But  the 
warehouse  has  no  salesmen  or  other  sales  expense.  Nor 
does  it  usually  give  credit  and  take  the  chances  on  bad 
debts.  Various  expensive  things  incident  to  soliciting 
business  can  be  eliminated  from  the  warehouse.  Thus  it 
comes  to  pass  that  goods  can  be  handled  through  the  non- 
soliciting  clearing  house  for  around  one-half  and  sometimes 
much  less  than  must  be  paid  to  the  regular  wholesaler  in 
order  to  meet  his  expenses  and  pay  him  a  profit.  If  it  costs 
ten  per  cent  of  the  retail  price  to  get  the  goods  cleared 
through  a  regular  wholesaler,  it  would  appear  to  be  pos- 
sible by  eliminating  the  necessity  of  persuasive  salesman- 
ship, bad  debts,  and  the  profit  of,  say,  two  per  cent  ordinarily 
paid  to  the  wholesaler,  to  get  goods  moved  through  the 
warehouse  for  not  exceeding  five  per  cent.  I  do  not  intend 
to  dogmatize  upon  this  subject,  but,  in  my  opinion,  here 
is  a  good  place  to  look  for  a  saving,  assuming,  of  course, 
that  dealers  would  need  no  soliciting,  which  is  true  under 
some  forms  of  organization. 

The  Chaos  of  Retailing 

Through  the  haphazard  organization  and  methods  of  a 
million  merchants  the  consumers  of  this  country  lose 
more  than  a  billion  dollars  a  year.  ^  More  than  fifty  dollars 
per  family  is  paid  each  year  for  the  inefficiency  of  the  retail 

'  The  report  of  the  Osborn  Commission  states: 
Estimated  cost  of  the  annual  foo'l  supply  of  Greater  New  York,  at 
terminals,  is  over  $350,000,000,   an  J   in  consumers'  kitchens  over 


58  CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

end  alone  of  our  present  distributive  machine.  And  yet 
the  profits  of  the  business  are  so  precarious  that  only  one 
in  twenty  who  start  stay  in  the  business.  ^ 

As  I  write  these  Hnes  there  pass  my  window,  toiling  up 
the  mountain,  half  a  dozen  delivery  wagons,  of  as  many  food 
Wasteful  dealers,  each  with  a  fraction  of  a  load.  In  this 
duplication  of  town  of  25,000  people  there  are  nearly  one 
stores  hundred  food  stores,  each  with  its  rent,  upkeep, 

management  and  miscellaneous  expenses  to  be  paid  by 
the  consumers  when  less  than  a  quarter  of  this  number  of 
stores  would  sufi&ce,  and  could  perform  the  purveying 
service  for  about  half  what  it  now  costs. 

There  is  at  least  one  grocery  store  to  every  sixty  families 
in  this  whole  country,  some  say  one  to  every  forty  families, 
each  with  its  separate  set  of  expenses  to  be  met  by  the  con- 
sumer.^   No  wonder  these  stores  vary  in  eflSciency  so  that 

$500,000,000,  or  $100  per  capita  for  5,000,000  people.  "We  think 
that  the  testimony  shows  that  this  addition  of  about  45%  to  the  price 
is  chiefly  made  by  cost  of  handling  and  not  by  profits.  .  .  .  The 
present  system  is  a  growth,  mainly  in  small  units,  and  shows  the  cost- 
liness of  multiplied  facilities  and  uneconomic  competition.  The  public 
have  thought  municipally  of  transportation,  police,  streets,  docks, 
water,  and  so  on,  but  have  thought  'comer-grocery-wise'  of  the  food 
supplies  which  make  nearly  half  of  their  cost  of  living.  While  each 
of  the  other  important  facilities  has  been  in  charge  of  prominent  de- 
partment heads,  the  provision  for  food  supplies  has  been  left  wholly 
to  the  development  of  unregulated  competition  and  has  resulted  in 
the  creation  of  makeshift  facilities  without  orderly  plan  or  system." 

»  Statement  of  the  National  Association  of  Credit  Men. 

«"The  most  impressive  feature  of  the  retaU  business,"  says  the 
Osborn  Commission,  "is  the  smallness  of  the  average  unit,  being  about 
one  store  to  every  250  persons,  leading  to  excessive  relative  cost,  and 
weakening  the  buying  power.  Total  cost  of  wholesaling,  including 
profits,  is  probably  about  10%.  Of  retailing,  about  33%,  added  ia 
both  cases  to  first  cost." 

"Likewise,  during  the  past  ten  years,  the  number  of  our  retail  stores 
has  increased  41%,  now  giving  us  one  retail  store  for  every  ten  urban 
families;  their  operating  expense  has  increased  112%;  their  delivery 
and  package  cost  126%;— and  the  population,— the  buyers,— only 
2i%-"-J-  LeRoy  Tope. 


THE   EXPENSIVE  MIDDLEMAN  59 

the  gross  profit  charged  by  them  ranges  all  the  way  from 
14.6  per  cent  to  27.9  per  cent.  Probably  the  stores  charg- 
ing the  highest  profit  also  pay  the  highest  wholesale  prices 
so  that  their  unfortunate  customers  are  still  further  bur- 
dened.^ A  careful  survey  recently  made  by  the  National 
Retail  Dry  Goods  Association  and  tabulated  by  Ernst  & 
Ernst,  New  York,  certified  pubhc  accountants,  shows  that 
retail  profits  based  upon  reports  from  twenty-four  states 
range  from  27.33  P^^  ^^^^  to  35.1  per  cent  of  the  selling 
price,  an  average  of  30.46  per  cent.  In  other  words,  goods 
costing  sixty-nine  and  one-half  cents  at  the  back  door  of 
these  stores  cost  the  consumer  when  carried  out  the  front 
door  one  dollar.  The  salesman  standing  behind  the  counter 
extolling  his  wares  is  paid  about  ten  per  cent  for  his  lecture 
in  spite  of  the  fact  that  he  may  be  talking  about  a  com- 
modity which  in  the  hands  of  the  manufacturer  has  already 
been  taxed  five  or  ten  per  cent  to  tell  the  same  story,  and 
the  store  may  have  also  paid  five  per  cent  for  advertising 
to  get  the  customer  to  come  to  the  store. 

In  the  light  of  the  facts  as  to  these  details  it  is  not  dif- 
ficult to  see  how  it  comes  to  pass  that  it  costs  the  consumer 
as  much  to  have  his  goods  sold  and  brought  to  him  as  it 
costs  to  have  them  grown  or  manufactured. 

Perhaps  the  most  outrageous  wastes  of  all  are  in  the 
serving  of  such  articles  as  ice  and  milk.    In  this  town  of 
25,000    above    referred    to,    there    are   fifteen  inefficient 
dealers  in  ice.     It  is  not  at  all  uncommon  to  oi^^e^'^^'d 
have  half  a  dozen  ice  wagons  each  with  its  miik 
heavy  melting  load  serve  the  families  on  two  blocks  of  a 
single  street.     The  sheer  inexcusable  waste  of  this  dis- 
orderly practice  is  around  one-fourth  of  what  the  consumer 
pays  for  his  ice.     That  is,  if  he  pays  60  cents  a  hundred 
pounds,  it  could  with  proper  concentration  be  served  at 
an  equal  profit  to  the  dealer  for  45  cents. 

The  wastes  of  milk  delivery  are  clearly  and  authentically 

*  "For  the  working  classes,"  says  Prof.  F.  W.  Taussig,  "The  small 
retail  trader  often  is  half  a  friend  in  need,  half  a  swindler,  and  a  par- 
asite.   There  is  opportunity  for  a  declaration  of  independence." 


6o  CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

set  forth  by  Dr.  John  R.  Williams  of  Rochester,  N.  Y.,  in 
an  article  in  the  World's  Work.  Dr.  WiUiams,  who  is  an 
indefatigable  worker  for  pure  milk,  has  made  a  very  ex- 
haustive study  of  the  milk  delivery  system  in  his  city  and 
verified  his  findings  by  experimental  tests.  Dr.  WilHams 
says: 

"I  found  that  in  a  section  in  which  most  of  the  inhabitants 
were  Negroes,  23  distributors  were  traveling  20  miles  daily 
to  supply  165  homes  which  could  be  supplied  by  one  dis- 
tributor traveling  only  two  miles. 

"On  an  average,  in  each  of  four  sections  of  American 
workingmen,  47  distributors  were  traveling  38  miles  to 
431  homes,  in  every  case  a  waste  of  more  than  40  men's 
work  and  of  25  miles  of  travel.  In  each  of  four  districts 
of  foreign  workingmen,  49  distributors  were  traveling  37 
miles  to  serve  317  homes  which  one  dealer  could  supply  in 
23^2  rniles  of  travel.  Twenty-six  distributors  were  traveling 
48  miles  to  supply  443  homes  of  middle-class  Americans, 
though  one  man  could  have  performed  the  same  service  by 
traveling  23^2  rniles.  In  each  of  five  sections  of  well-to-do 
homes,  23  distributors  were  traveling  22  miles  to  perform  a 
single  distributor's  service  of  traveling  a  little  more  than 
2  miles  to  173  homes." 

Dr.  Williams  concludes  his  exhaustive  and  significant 
report  with  the  following  table  showing  what  might  be 
saved  to  the  milk  consumers  of  one  city  by  a  sane  method 
of  distribution.  Moreover,  it  should  be  borne  in  mind 
that  efficient  distribution  has  a  way  of  reaching  back  and 
causing  efficient  production. 


THE   EXPENSIVE  MIDDLEMAN  6l 

The  Cost  of  Distributing  Milk  in  Rochester 
Under  the  Present  System  Under  a  Model  System 

356  men  and  in  many  cases  their  90  men 

families  80  horses 

380  horses  25  horse-drawn  trucks 

305  wagons  300  miles  of  travel 

2,509  miles  of  travel  $40,000  equipment  for  i  sanitary 

$76,600  invested  in  milk  room  plant 

equipment  $30,750  equipment  of  horses  and 

$108,000  invested  in  horses  and  trucks 

wagons  $600  estimated  daily  cost  of  dis- 

$2,000  present  daily  cost  of  dis-  tribution 

tribution  $220,000  estimated  yearly  cost  of 

$720,000  yearly  cost  of  distribu-  distribution 

tion 

The  wastes  which  are  obvious  in  ice  and  milk  ^  distribution 
are  as  real,  though  less  obvious,  in  many  departments  of 
retailing. 

An  ingenious  and  resolute  pioneer  now  and  then  finds  a 
more  direct  trail  through  the  distributive  jungle.  Some 
of  these  reduce  the  distance  and  the  cost  by  "  Public 
nearly  half.  In  some  cases  the  consumer  gets  Markets " 
the  benefit.  In  the  New  England  "public  markets"  the 
gross  profit  charged  the  consumer  in  some  stores  is  less 
than  20  per  cent.  And  since  most  of  the  goods  are  with- 
out wholesaUng  burden,  the  customer  is  saved  perhaps 
15  per  cent  compared  with  the  cost  in  less  favored  sec- 
tions. A  town  some  50  miles  from  New  York  has  its 
foodstuffs  served,  including  soliciting  of  orders  and  long  dis- 
tance dehvery,  for  15.5  per  cent  by  a  community-owned 
store. 

But  most  of  the  systems  of  retailing  in  which  new  econ- 
omies are  sought  are  for  revenue  only.  The  proprietors 
put  in  their  pockets  all  the  savings  except  just  enough  to 

'  Prof.  Clyde  L.  King  of  the  University  of  Pennsylvania  believes 
that  milk  distribution  should  be  regarded  as  a  public  utility.  See 
article  in  the  Survey,  Feb.  24,  1917,  page  605. 


62  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

win  the  trade  of  the  consumer.  There  are  half  a  dozen 
MaU  order  big  mail  ordcr  houses  which  are  said  to  pass 
houses  goods  from  producer  to  consumer  at  less  cost 

than  can  be  done  through  wholesale  and  retail  stores. 
These  have  grown  to  a  point  where  they  handle  some 
hundreds  of  millions  of  dollars  worth  of  goods  per  year. 
But  their  reports  indicate  that  the  proprietors  retain  for 
profits  about  ten  cents  out  of  every  dollar  of  sales.  ^ 

The  so-called  chain  stores  are  growing  rapidly,  and,  for 
the  class  of  goods  they  purvey,  undoubtedly  distribute  at 
less  cost  than  old  line  retail  stores.  But  the  following 
The  chain  table  showing  the  growth  of  business  of  four 
store  five-and-ten-cent  stores  gives  at  the  right  the 

net  profit  made  on  each  dollar  of  sales  which  indicates 
that  they  are  not  operating  for  love. 

igi§  igi6  Profit  per  dollar 

Woolworth           $76,995,774  $87,082,513              9.9 

Kresge                     20,943,300  26,393,544               6. 

Kress                       12,429,580  15,122,558               8.8 

McCrory                   5,613,987  6,786,980               6.8 

The  Woolworth  Company  now  operates  about  1,000 
stores.  The  chain  grocery  stores  which  have  made  state- 
ments lately  in  connection  with  the  issue  of  new  securities 
seem  to  indicate  that  their  net  profits  available  for  owners 
range  about  the  same  as  those  of  the  five-and-ten-cent  stores, 
while  the  cigar  and  drug  store  chains  probably  make  more 
net  profit. 

The  point  here  is  that  the  consumer  is  not  likely  to  be 
benefited  much  in  the  way  of  lower  prices  by  these  stores 
since  no  reductions  are  likely  to  be  made  except  spec- 
tacular ones  to  draw  trade,  and  these  are  said  to  be  largely 
"apparent."  Moreover,  there  are  grave  reasons  for  ap- 
prehension as  to  what  will  happen  when  these  chain  stores 
become  so  numerous  that  those  of  one  company  feel 
keenly   the   competition   of   those   of   another   company. 

» Sears,  Roebuck  &  Co.'s  net  profit  on  sales  of  $146,837,507  for  the 
first  six  months  of  191 7  was  12.65  per  cent. 


THE   EXPENSIVE   MIDDLEMAN  63 

Here  would  appear  to  be  all  the  conditions  of  a  very  ob- 
noxious monopoly.  The  trend  toward  combination  has 
already  set  in  in  Philadelphia  and  the  Middle  West.  One 
of  these  companies  already  has  over  3,300  stores. 

In  short,  there  is  very  little  of  promise  and  much  of 
menace  in  the  coming  of  the  chain  store.  If  stores  of  this 
type  have  introduced  some  real  economies,  they  certainly 
need  give  the  saving  to  the  consumer  only  so  far  as  seems 
expedient  in  order  to  attract  trade  from  the  inefficient 
dealer.  And  when  the  independent  is  wiped  out  by  a 
concentration  of  the  chain  attention  upon  a  single  com- 
munity, then  the  chain  need  not  give  any  advantages  of 
economy  for  it  will  have  it  all  its  own  way.  In  other  words, 
the  efficient  store  may  fix  its  prices  by  the  inefficient,  giv- 
ing the  public  only  enough  real  or  apparent  attractions  to 
win  trade. 

However,  the  profits  of  merchandizing  which  should 
be  saved  to  the  consumer  are  not  so  much  as  the  downright 
wastes — wastes  incident  to  competition,  and  Not  profits  of 
wastes  incurred  by  the  present  profit  store  much^Ts  °ac- 
to  attract  but  not  to  serve  customers;  all  sales  tuai  wastes 
pushing,  for  instance,  beyond  legitimate  en-  saved  to  con- 
lightenment  of  the  consumer;  all  expenses,  in  sumers 
short,  not  necessarily  incurred  to  bring  goods  to  the  con- 
sumer. 

It  is  the  dealer's  interest  to  incur  expense  whenever  and 
wherever  he  can  get  back  the  amount  expended  with  a 
profit.  He  will  pay  for  all  sorts  of  things  which  are  more 
visible  to  the  customer  than  all  the  concealed  charges 
therefor.  Excessive  salesmanship,  excessive  or  unproduc- 
tive advertising,  trading  stamps,  excessive  rent,  excessive 
service,  too  costly  packaging  and  all  manner  of  things 
which  lure  but  do  not  serve  the  consumer  come  under  this 
head.  The  consumer,  uninformed  or  unthinking,  feels 
that  he  is  getting  something  for  nothing,  whereas  he  is 
getting  nothing  for  something.  The  plain  and  repeatedly 
proven  fact  is  that  the  consumer  in  the  uneven  contest 
with  the  dealer  is  habitually  fooled  into  paying  the  cost  of 


64  CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

a  lot  of  lost  and  useless  motion  and  also  paying  a  profit 
thereon. 

Closely  related  to  the  overcharge  for  the  distributive 
service  which  the  consumer  requires  is  his  uncertainty  as 
to  whether  he  is  being  overcharged  at  any  given  time,  and 
how  much.^  He  steps  into  a  drygoods  store  and  buys  an 
article  for  ten  dollars  and  of  this  price  only  one  dollar  is 
for  distributive  service.  For  the  next  article,  perhaps  in 
the  same  store,  and  costing  him  the  same  price,  he  pays 
five  dollars  for  retail  distribution.  Why?  Or  he  buys 
ten  dollars'  worth  of  food  distributed  through  a  certain 
channel  and  the  purveying  expense  from  producer  to  con- 
sumer is  only  two  dollars.  Another  ten  dollars'  worth 
distributed  through  a  different  channel  is  charged  a  dis- 
tribution tax  of  four  dollars.  Why?  A  disquieting  thing 
about  this  discrepancy  is  that  the  high  profit  is  on  the 
article  the  consumer  knows  least  about — tea,  spices,  etc., 
while  the  very  low  profit  is  on  the  article  which  is  uniform 
in  quality  and  everyone  knows  about,  like  sugar  or  nails. 
In  other  words,  under  the  present  system  (or  lack  of  sys- 
tem) the  robbery  of  the  consumer  is  committed  in  the  dark.^ 

*  In  this  connection  might  be  mentioned  the  "installment  plan," 
uncertain  in  the  amount  of  its  tax  on  consumers,  but  very  costly  as 
well  as  discouraging  to  thrift. 

2  Another  thing  which  adds  to  the  consumer's  feeling  of  uncertainty 
is  the  wide  variety  of  prices  charged  for  the  same  goods  in  different 
parts  of  the  country,  state,  or  even  city.  An  article  in  the  New  York 
Times  for  June  i,  1916,  says:  "Sea  bass  sold  for  4  cents  a  pound  in  a 
Fulton  Market  and  25  cents  on  the  upper  west  side  yesterday.  .  .  , 
Halibut  at  14  cents  on  the  wharves  were  worth  28  cents  uptown." 
It  is  hard  to  believe  that  all  this  difference  was  accounted  for  by  cost 
of  cartage,  ice  and  similar  necessary  physical  expenses." 

"A  brass  lock  sells  for  20  cents  in  Binghamton,  25  cents  in  James- 
town, N.  Y.,  30  cents  at  Atlantic  City,  and  so  on  to  50  cents  in  Bangor, 
Maine,  and  Topeka,  Kansas.  ...  An  8-inch  hasp  and  staple  begins 
at  4  cents  in  AUentown,  Pa.,  works  up  to  10  cents,  which  is  the  general 
rate,  and  stops  at  20  cents  at  Atlantic  City."  New  York  Times, 
May  8,  1911. 


CHAPTER  IV 
THE  SOCIAL  COST  OF  THE  COMPETITIVE  DEALER 

"Forsooth,  brothers,  fellowship  is  heaven  and  lack  of  fellowship  is 
hell;  fellowship  is  hfe,  and  lack  of  fellowship  is  death;  and  the  deeds 
that  ye  do  upon  the  earth,  it  is  for  fellowship's  sake  that  ye  do 
them."— William  Morris,  A  Dream  of  John  Ball. 

"This  is  the  time  for  America  to  correct  her  unpardonable  fault  of 
wastefulness  and  extravagance." — Woodrow  Wilson. 

That  "Competition  is  War"  is  admitted  even  by  its 
friends.  Like  war,  competition  for  profit  causes  a  brood 
of  evils  which  would  not  be  tolerated  by  civilized  society 
except  for  the  general  belief  that  there  is  no  other  way. 
So  we  go  forward  trying  to  repress  by  regulation  evils  which 
are  in  fact  inherent  in  the  system. 

Among  the  evils  caused  by  our  profit-propelled  system 
of  distribution  of  commodities  are  the  concen-  some  evils  of 
tration  of  wealth  in  few  hands,  the  discourage-  compeution 
ment  of  thrift  and  the  engendering  of  antagonisms,  narrow 
selfishness  and  dishonesty. 

A  privately  owned  store  draws  net  profits  to  its  owner 
as  a  magnet  draws  iron.  If  we  take  the  percentage  of  net 
profits  made  by  the  various  types  of  what  are  regarded  as 
more  eflacient  distributors,  we  find  that  a  common  figure 
of  net  profit  to  the  owner  in  department  stores  is  6  per 
cent;  in  chain  stores,  6  to  lo  per  cent;  in  mail  order  houses 
as  high  as  12  per  cent;  it  probably  would  not  be  far  wrong 
to  estimate  that  8  per  cent  net  profit  goes  to  the  owners  of 
agencies  distributing  $10,000,000,000,  or  one-half  our  total 
products.  In  other  words,  SSoo,ooo,ooo  probably  flow 
from  the  pockets  of  the  many  to  the  pockets  of  the  few 
rich  each  year  by  reason  of  consumers  paying  that  much 
more  than  the  cost  of  distributing  their  goods. 


66  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

Here  we  are  speaking  of  the  money  which  each  year 
the  consumer  public  sinks  in  the  bottomless  coffers  of  a 
few  of  the  large  efficient  distributing  concerns.  We  do  not 
here  refer  to  the  millions  of  dollars  worth  of  goods  handled 
by  small  dealers  who  make  practically  no  profit.  They 
waste  for  the  consumer  as  large  a  percentage  which  is  an 
economic  loss,  but  not  a  cause  of  concentration  of  wealth. 
In  both  cases,  however,  the  consumer  loses. 

Competitive  trading  tends  to  pour  back  wealth  to  the 
large  dealer. 

That  the  centralization  of  the  wealth  of  society  in  the 
hands  of  the  few  is  distinctly  anti-social,  few  will  dispute. 
It  means  at  one  end  of  the  economic  scale  great  and  dan- 
gerous and  largely  irresponsible  power  in  the  hands  of 
those  who  may  or  may  not  use  it  wisely  or  ethically,  and 
who  have  within  their  caprice  and  choice  the  decisions  that 
determine  the  life  conditions  of  multitudes.  It  means  at 
its  worst  the  profligacy  and  extravagance  and  uselessness 
and  parasitism  of  the  idle  rich  who  are  recklessly  lavish 
with  the  wealth  they  have  never  earned.  It  means  at  its 
best  the  well-being  of  thousands  depends  on  the  good  in- 
tentions of  a  few.  Such  conditions  of  centralized  and  ir- 
responsible power  we  no  longer  tolerate  in  the  political 
order  where  lands  have  been  made  safe  for  democracy, 
and  will  no  longer  tolerate  in  the  field  of  economics  when 
we  have  had  our  house-cleaning  there. 

The  centralization  of  wealth  means  at  the  other  end  of 
the  economic  scale  that  the  major  portion  of  the  population 
is  near  the  line  of  economic  dependence,  may  be  thrust 
below  that  line  by  any  misfortune  of  sickness  or  unem- 
ployment, and  must  live  with  comparatively  meagre 
opportunities.  It  robs  the  poor  to  profit  the  rich  and  then 
stigmatizes  those  who  are  too  often  the  victims  of  an  unfair 
system  rather  than  of  their  own  shortcomings.  It  makes 
them  dependent  and  then  despises  them.  It  permits  and 
supports  institutions  that  bring  this  about  instead  of 
creating  those  that  prevent  and  defeat  this  inequality,  and 
in  numberless  cases  society  itself  must  therefore  be  held 


THE  SOCIAL  COST  OF  THE  COMPETITIVE  DEALER    67 

responsible  for   the   result,   inevitable   under  its  present 
system. 

Any  system  which  would  cause  the  wealth  centralized 
to-day  to  flow  throughout  society  would  do  for  it  what  the 
physician  does  when  he  causes  the  blood  congested  in  some 
part  of  the  body  to  circulate  freely  throughout  the  body. 
An  addition  of  even  ten  per  cent  to  the  income  of  any 
family  of  modest  income  means  increased  richness  of  life 
and  higher  standards  of  living.  Concentrated  wealth  is  a 
menace  to  democracy  and  means  an  unequal  and  partial 
and  one-sided  development  of  society. 

If  the  present  system  of  selling  were  devised  expressly 
to  discourage  thrift,  it  could  hardly  do  so  more  effectually. 
What  is  regarded  as  salesmanship  is  selling  a  Discourage- 
customer  what  he  does  not  want.^    The  average  ™^°*  °^  *^"^ 
woman  is  no  match  for  the  modern  trained  salesman. 

In  our  opinion,  the  average  man  and  woman  are  not  so 
indifferent  to  the  good  things  of  this  world  that,  hke  a 
delicate  invalid,  things  must  be  pressed  upon  them  by  all 
the  arts  of  psychology  and  salesmanship.  **  Good  business" 
for  the  dealer  is  bad  economy  for  the  customer. 

There  is  the  fact  that,  for  the  things  thus  sold,  the  highest 
obtainable  price  is  charged;  add  to  this  the  influence  of 
buying  on  credit  ^  and  we  have  an  anti-thrift  system  which 

1  See  Chapter  I. 

*  Says  the  American  Bankers'  Association: 

"All  large  stores  have  made  it  a  steady  policy  to  encourage  the 
opening  of  charge  accounts,  being  liberal  in  their  rules  as  to  the  credit 
risk.  A  man  need  have  but  a  few  good  references  and  check  up  well 
to  be  honored  with  a  place  on  the  books  of  the  house,  where  he  may 
buy  up  to  a  certain  limit,  have  it  charged,  receive  his  bill  monthly 
and  pay  within  a  reasonable  time,  which  should  be  two  weeks.  There 
are  obvious  advantages  in  this  feature  of  modem  business,  and  the 
department  stores  are  constantly  importuning  people  to  avail  them- 
selves of  such  facilities.  But  beware  of  this  alluring  bait.  It  tempts 
you  to  over-buy,  purchasing  the  things  you  do  not  need,  perhaps,  and 
would  not  buy  if  you  had  to  pay  cash. 

"Human  nature  is  alike  ever>'^vhere.  We  all  succumb  to  such 
temptations.    The  charge  account  does  facilitate  shopping,  for  you 


68  CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 

is  well-nigh  complete.  This  surely  is  one  reason  why  more 
than  half  the  families  in  this  country  live  in  rented  homes 
and  one-third  of  the  owned  homes  are  mortgaged.^ 

Thrift,  which  has  a  true  eye  to  relative  values,  is  not 
to  be  confused  with  tight-fisted  penuriousness.  Thrift 
recognizes  the  fact  that  a  small  hoard  of  voluntary  savings 
is  valuable  not  only  as  a  sum  of  money  but  as  the  greatest 
source  of  independence  and  self-respect,  and  that  to  take 
no  thought  for  the  future  and  the  rainy  day  is  deliberate 
potential  dependence.^ 

Thrift  has  had  few  apostles  in  modem  America,  but 
war  has  re-taught  us  its  forgotten  value.  We  are  coming 
to  see  again  how  anti-social  are  the  spenders.  The  indi- 
vidual who  is  thrifty  is  making  himself  independent,  is 
cultivating  self-reUance,  is  guarding  against  becoming  a 
burden  on  society;  but  the  wasters  are  destroying  what 
labor  has  produced,  are  diverting  labor  and  capital  from 
where  society  most  needs  them  to  engage  in  trifling  and 
unremunerative  ^  tasks.  The  competitive  system  when 
it  stimulates  thoughtless  spending  and  carelessness  in  our 
use  of  money  insiduously  saps  the  moral  fibre  of  the  people 
and  under  such  a  system  society  is  not  conserving  its  re- 
sources or  developing  them  for  the  good  of  the  whole  but  is 
letting  the  profiteers  waste  the  forests  and  mineral  re- 
sources, reaping  the  immediate  gains  regardless  of  future 
do  not  have  to  wait  for  change,  may  return  goods  with  ease  and  have 
a  record  of  what  you  buy  each  month." 

1  The  latest  census  of  the  United  States  gives  the  number  of  famih'es 
occupying  homes  as  20,000,000.  Of  this  number  more  than  one-half, 
10,700,000,  are  renters.  Of  the  9,000,000  who  live  in  their  own  homes, 
6,000,000  are  free  from  debt  and  3,000,000  are  carrying  mortgages. 

25.  W.  Straus  says:  "The  records  of  the  Surrogate  Courts  show 
that  out  of  a  hundred  men  who  die  three  leave  estates  of  $10,000. 
Fifteen  leave  estates  of  $2,000  to  $10,000.  Eighty- two  of  every  hun- 
dred leave  no  income-producing  estates  at  all.  Thus  out  of  every 
hundred  widows  only  eighteen  are  left  in  good  or  comfortable  circum- 
stances. Forty-seven  others  are  obliged  to  go  to  work  and  thirty-five 
are  left  in  absolute  want." 

'  Hartley  Withers:  Poverty  and  Waste,  Button. 


THE   SOCIAL  COST  OF  THE   COMPETITIVE   DEALER        69 

needs.  It  has  made  us  a  generation  of  spenders,  from  the 
under-paid  woman  on  the  East  Side  who  patronizes  the 
delicatessen  store  to  the  climbers  and  the  gilded  youths. 
Dr.  E.  T.  Devine  sums  up  the  principle  under  it  all  when 
he  says,  "There  is  no  economic  function  higher  than  that 
of  determining  how  wealth  shall  be  used." 

The  anti-social  influences  of  whatever  creates  a  necessary 
difference  of  interest  between  the  dealers  and  the  con- 
sumers and  an  unavoidable  antagonism,  covert  or  open, 
between  them,  are  obvaous.  The  foundations  of  social 
action  rest  on  a  community  of  interests.  Social  progress 
is  in  proportion  to  the  degree  of  unity  and  community 
attained.  Whatever  divides  people  into  separate  camps  is 
anti-social.  Whatever  unifies  their  interests  and  unites 
groups  or  classes  is  social.  Our  present  competitive  system 
is  in  its  very  name  frankly  based  on  the  clash  and  struggle 
of  differing  interests.  With  the  lessening  of  conflict  and 
the  growth  of  mutual  aid  in  the  evolutional  process,  its 
power  to  serve  diminishes  to  the  vanishing  point. 

Not  only  does  the  present  system  directly  concentrate 
wealth  in  a  few  hands  and  work  against  thrift,  but  com- 
petition for  profit  produces  a  relation  of  an-  Profit-com- 
tagonism,  and  between  dealer  and  dealer  and  fem^  makir' 
between  dealer  and  consumer  there  is  a  triangle  for  antago- 
of  trade  debasement  which  constantly  tends  de^^ers^  imd  ° 
to    undermine    moral    standards    and    honest  ^^tf  ^®° 
practice.     If  the  relation  between  dealer  and  customers 
dealer  is  fundamentally  warfare,  that  between  dealer  and 
customer  is  an  armed  truce.     Between  the  dealer  who 
stands  back  of  his  counter  and  the  customer  in  front  of  it 
there  is  no  mutuality  of  interest.     Indeed,  their  interests 
are  fundamentally  opposite.    As  the  profit  rises  the  con- 
sumer loses  and  the  dealer  gains,  and  vice  versa.     The 
suspicion  \vith  which  the  customer  regards  the  dealer  and 
the  consciousness  of  that  suspicion  on  the  part  of  the  dealer 
is  not   conducive   to  an  atmosphere  either  elevating  or 
comfortable.    To  be  sure,  this  relationship  is  veiled.    It  is 
none  the  less  real.    The  dealer  may  not  be  dishonest  nor 


70  CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

the  customer  a  pessimist,  but  statistics  justify  the  eternal 
vigilance  which  has  become  so  much  a  habit  of  the  buyer 
that  he  is  unconscious  of  it.  The  very  system  exploits  the 
consumer.  Profits  are  secret  and  are  largest  on  the  goods 
of  which  the  buyer  knows  least.  This  is  essentially  unfair. 
Influence  on  And  how  about  the  influence  on  the  shopper! 
the  shopper  She  is  trying  to  beat  the  dealer  at  his  own 
game.  She  shops  and  haggles.  She  feels  obliged  to  get 
the  most  for  her  money.  Again,  there  is  the  woman  who, 
instinctively  feeling  the  tension  of  the  situation  and  hating 
suspicion  and  open  warfare,  becomes  timid  and  cowed. 
How  many  women  are  so  entirely  lovely  when  they  do  the 
marketing  that  they  would  like  to  be  thereby  judged  by 
their  social  friends?  It  is  not  a  dignified  business  and 
should  not  be  necessary. 

Holyoake,  the  historian  of  the  English  co-operative 
movement,  comments  interestingly  on  the  effect  of  com- 
petition upon  the  consumer:  *'If  social  truths  found  their 
way  to  tombstones,  we  should  read  many  inscriptions  to 
the  following  effect: 

Here  Lies 
A  'Practical'  Man  of  Business,  who  had  an  eye  to  the  main 
chance  which  was  always  open. 
His  heroic  life  was  an  incessant  contest  with 
His  Butcher  and  his  Butterman,  his  Baker  and  Draper. 
He  died  through  premature  exhaustion 
In  trying  to  avoid  being  Poisoned  or  Cheated 

Like  so  many  others, 
He  perished  ingloriously 
The  Vigilant  Fool  of  Competition." 

And  how  about  the  influence  upon  the  morals  of  dealers 
and  clerks?  Where  goods  are  unstandardized  as  are  meats, 
Influence  on  vegetables  and  various  other  food  materials, 
dealers  and  where  qualities  shade  off  into  each  other,  what 
clerks  j^^^^  j^  there  of  the  word  "good"  retaining  any 

meaning?    I  was  once  told  by  the  owner  of  large  markets 


THE  SOCIAL  COST  OF  THE  COMPETITIVE  DEALER   7 1 

in  New  York  City  that,  for  a  certain  department  of  his 
business  there  was  no  such  thing  as  an  honest  salesman 
to  be  had.  Let  us  hope  that  this  was  an  extreme  state- 
ment. But  I  have  had  more  than  one  applicant  for  the 
management  of  the  co-operative  store  with  which  I  was 
connected  deliberately  advocate  dishonest  practices.^  It 
has  been  well  said  that  it  takes  more  religion  to  hold  a 
man  level  in  a  horse  trade,  or  any  other  trade,  than  it 
does  to  make  him  shout  at  a  camp  meeting.  In  my  private 
opinion,  to  put  boys  into  a  business  where  exploiting  is 
recognized  as  legitimate  and  where  deception  is  winked  at, 
is  simply  a  crime.  The  whole  system  and  business  tends 
towards  blurring  the  moral  sensibilities  and  producing  just 
the  characters  of  which  the  world  stands  least  in  need. 

There  is  a  better  way. 

Our  competitive  system  means  the  slow  poisoning  of 
society.    Its  ethics  and  sociology  are  those  of  the  jungle. 
Its  law  is  the  law  of  the  talon.    It  is  the  eco-  increasing 
nomic  struggle  for  existence,  and  the  fittest  who  combination 
survive  are  the  best  fighters  who  profit  most  only  inten- 
on  others'  losses.    It  is  a  fight  to  the  death  and  bftweeT^*^ 
its  terrible  mortality  has  so  impressed  its  own  Dealer  and 
devotees  that  again  and  again  they  have  de-  Consumer 
clared  a  truce  and  formed  great  alliances  with  each  other. 
"  Combination  is  rapidly  replacing  competition  in  the  field 
of  production  and  we  are  witnessing  to-day  the  coming  of 
combination  into  the  field  of  distribution  where  the  chain- 
stores, — groceries,  drug  stores,  five-and-ten-cent  stores,  cigar 
stores — perchance  forerunners  of  a  complete  domination 
of  this  field  by  mammoth  combinations.    But  this  approach- 

1  For  instance,  one  advocated  mixing  older  animals  with  lambs  and 
selling  them  to  the  less  discriminating  customers.  Another  advocated 
selling  coffee  out  of  the  same  bag  at  different  prices.  These  two  were 
both  men  in  good  standing  who  had  occupied  positions  of  responsibil- 
ity in  other  stores. 

I  have  repeatedly  been  told  that  it  is  well  known  in  the  trade  that 
the  only  way  to  sell  goods  in  very  many  houses  in  New  York  is  to 
bribe  the  chef  or  other  employee  doing  the  buying. 


72  CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

ing  elimination  of  one-half  of  the  competition — that  be- 
tween dealer  and  dealer — leaves  more  acute  and  merciless 
the  strife  between  dealer  and  consumer.  For  the  latter 
it  is  exchanging  King  Log  for  King  Stork.  Where  once 
the  customer  dealt  with  his  corner  grocer  as  man  to  man, 
he  is  now  the  pawn  of  gigantic  corporations  which  have 
him  at  their  mercy.  ^  The  second  state  of  the  unorganized 
consumer  is  worse  than  the  first.  The  Unes  of  division  are 
becoming  more  sharply  drawn  and  our  economic  structure 
is  a  house  divided  against  itself. 

Man  is  a  many-sided  being,  a  "harp  of  a  thousand 
strings."  His  life  is  influenced  and  modified  by  his  physical 
Our  economic  environment,  by  his  intellectual  opportunities, 
profoundly'^*  by  his  emotional  possibihties,  by  his  ethical  and 
influences  us  reUgious  Stimuli,  by  his  social  advantages.  The 
world  about  us  plays  upon  us  and  our  reactions  precede 
and  determine  our  actions.  Our  economic  setting,  al- 
though often  overlooked,  is  a  daily  factor  of  major  impor- 
tance in  our  making.  Every  individual  is  a  consumer,  and 
how  his  world  deals  with  him  as  a  consumer  may  make  or 
break  him  and  is  sure  to  mold  him. 

What  judgment  shall  we  then  pass  upon  a  distributive 
system  like  the  one  under  which  we  hve,  which  is  based  on 
economic  antagonism,  which  is  the  sanctioned  exploitation 
of  the  weak,  which  penalizes  need,  preys  upon  the  poor  and 
unsuspecting,  and  places  a  premium  upon  skill  in  con- 
ceahng  gains,  which  takes  from  the  many  under  compen- 
sated and  gives  to  the  over-remunerated  few,  which  has 
no  stimulus  to  thrift  for  her  who  buys  and  few  incentives 
to  utter  frankness  and  honesty  for  him  who  sells,  whose 
very  mottoes  are,  "Let  the  buyer  beware"  and  "Every 
man  for  himself  and  let  the  devil  take  the  hindermost"? 
Can  a  system  which  is  fundamentally  a  device  of  injustice, 
and  operates  to  profit  the  clever  and  strong  at  the  expense 
of  the  unsuspecting,  confiding  and  financially  weak, — one 
which  opens- a  gulf  between  seller  and  buyer,  necessitates  a 

^  "Take  the  face  to  face  element  out  of  a  relation  and  any  lurking 
devil  in  it  comes  to  the  surface."    Ross:  Sin  aitd  Society,  page  io6. 


THE  SOCIAL  COST  OF  THE  COMPETITIVE  DEALER   73 

constant  struggle  of  their  conflicting  interests  and  means 
on  the  one  side  adulteration  and  short  weights,  incentives 
to  sharp  dealing,  concealed  profits,  the  jugglery  of  price 
cutting  and  subsequent  recouping;  and  on  the  other,  bar- 
gain-hunting, haggling  and  suspicion,  an  unending  contest 
in  the  dark  with  no  love  lost, — can  such  a  system  ever 
guide  human  society  towards  its  desired  havens  or  produce 
the  individuals  the  future  needs?  Is  not  its  cumulative 
effect  increasingly  making  for  inequality  and  division? 
Is  not  the  handwriting  on  the  wall?  Has  not  our  present 
system  of  distribution  been  weighed  in  the  balance  of 
human  good  and  ill  and  been  found  wanting? 


PART  II 
REASONS  AND  THE  REMEDY 


CHAPTER  V 
THE  HOPE  OF  THE  CONSUMER 

"One  of  the  things  that  strikes  me  with  regard  to  all  co-operative 
associations  is  that  the  characteristic  feature  of  an  active  life  is  co- 
operation."—Woodrow  Wilson. 

"As  years  go  on  I  am  more  and  more  impressed  with  the  idea  that 
economic  reform  is  likely  to  come  through  the  agency  of  the  Con- 
sumer rather  than  from  other  sources."— President  Hadley,  Yale. 

"The  way  to  stop  the  trusts  from  fixing  prices  on  goods  is  to  take 
the  goods  away  from  the  trusts,  and  then  they  will  have  nothing  to 
fix  prices  on." — David  Lubjn. 

I  have  shown  hovi^,  by  the  present  mercantile  system, 
consumers  are  heavily  burdened  and  placed  in  a  position 
of  disadvantage  and  uncertainty.  In  tens  of  thousands  of 
homes  these  avoidable  burdens  amount  to  enough  to  make 
all  the  difference  between  hunger  and  comfort,  and  in  the 
nation  as  a  whole,  involve  an  annual  waste  expressed  in 
billions  of  dollars. 

What  is  the  remedy?  To  find  it  the  cause  must  be 
located.  Why  are  goods  so  pushed  upon  the  consumer 
that  he  buys  when  he  should  not,  and  selects  unwisely 
much  that  he  buys?  Why  must  he  exercise  eternal  vigilance 
to  avoid  low  quality  and  short  measure?  And  why  must 
he  be  hea\ily  taxed  to  meet  the  expense  of  circuitous  and 
inefficient  distributive  methods,  including  the  needless 
duplication  of  parallel  purveying  agencies? 

There  is  a  single  cause  for  all  these  things,  namely, 
profit — the  quest  for  concealed  profit  on  the  part  of  the 
dealer  who  controls  the  machinery  of  distribution.  The 
dealer  stands  between  the  producer  and  the  consumer  and 
so  manipulates  tlie  processes  of  distribution  as  to  get  the 
largest  possible  profit.  His  very  success  depends  upon 
increasing  the  difference  between  the  price  received  by 


78  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

the  producer  and  that  paid  by  the  consumer.  To  do  this 
he  must  depress  the  one  and  elevate  the  other  as  much  as 
possible.  The  dealer  not  only  has  no  direct  incentive  to 
reduce  the  cost  of  distribution,  but  will  add  to  it  when- 
ever the  smallest  fraction  of  the  addition  can  be  retained 
by  him  as  profit.  The  exactions  of  this  alien  interest  have 
been  supposed  to  be  limited  by  competition  which  force 
was  also  depended  upon  to  insure  economical  methods  of 
handling,  and  to  pass  on  to  the  consumer  the  savings. 

But  competition  fails.  Never  has  there  been  such  vaHd 
and  voluminous  testimony  to  the  fact  that  competition 
Growing  dis-  ^"^^  ^^^Y  latterly  fails  to  protect  the  con- 
trust  of  com-  sumer,  but  enormously  adds  to  his  burdens, 
pe  1  ion  From  President  Wilson  and  Mr.  Hoover  down 

through  the  state  and  municipal  investigators  comes  an 
almost  unanimous  verdict  to  this  effect.  Nearly  every 
measure  adopted  or  reform  recommended  expresses  or 
imphes  the  fact  that  competition  is  no  longer  to  be  relied 
upon.  What  then?  The  measures  of  relief  applied  or  sug- 
gested are  of  the  crudest  and  most  temporary  character, — 
food  seizure,  fixing  of  maximum  prices  or  state  and  mu- 
nicipal competition  with  retail  traders.  In  most  cases  these 
are  admittedly  temporary  expedients  only  justified  by  the 
war  emergency,  but  they  serve  still  further  to  awaken  the 
already  widespread  distrust  among  consumers.  The 
alarmist  who  claims  that  most  of  the  present  advance  in 
prices  is  due  to  speculation  is  certainly  wrong.  But  so  is 
the  complacent  authority  who  asserts  that  speculation  and 
extortion  have  no  adverse  influence  upon  the  cost  of  living. 
One  thing  can  hardly  be  denied, — namely,  that  consumers 
who  have  not  already  lost  their  faith  in  competition  as  a 
force  to  protect  their  interests  are  fast  losing  it. 

An  examination  then  of  the  present  distributive  system 
shows  that  it  has  a  fundamental  defect  the  removal  of 
Evils  of  dis-  which  is  necessary  in  order  to  eliminate  its 
S^cimpeti-"''  ^v^ls.  The  short-comings  of  present  distribution 
tion  for  profit  are  all  the  logical  results  of  one  cause,  namely— 
the  quest  for  concealed  competitive  profits.    The  distributive 


THE  HOPE   OF   THE   CONSUMER  79 

machinery  is  run  not  in  the  interest  of  the  consumers 
whom  it  is  supposed  to  serve,  but  in  that  of  the  dealer 
whose  interests  are  opposed  to  their  interests.  In  order  to 
survive,  the  dealer  must  continually  seek  his  own  profit. 
Thus  the  distributive  system  is  wrongly  motived,  and  so 
long  as  this  is  unchanged  there  is  little  hope  of  relief  from 
better  physical  facilities  for  handling  goods,  terminal  ware- 
houses and  the  like,  nor  in  new  mercantile  systems — the 
chain  store,  public  market  or  other  innovation.  Of  better 
facilities  and  methods  there  is  certainly  great  need,  but 
the  advantages  of  these  are  not  at  all  sure  nor  even  likely 
to  reach  the  consumer  so  long  as  they  are  in  the  hands  of 
interests  which  have  no  incentive  to  pay  the  producer  more 
or  charge  the  consumer  less.  At  present,  with  the  ma- 
chinery of  distribution  under  the  control  of  the  profiteer, 
there  is  and  will  be  incentive  to  invent  more  economical 
methods  only  so  far  as  the  advantages  accruing  therefrom 
can  be  appropriated  by  the  middlemen.  This  effectually 
cuts  off  all  hope  of  radical  reform  in  this  quarter. 

The  Fundamental  Remedy 

Is  it  not  therefore  evident  that  the  only  way  out  is  to 
get  the  distributive  machinery  out  of  the  hands  of  a  third 
party  with  alien  interests  and  into  those  of  the  consumer 
public?    How  is  this  to  be  done,  and  is  it  feasible? 

Let  consumers  build  and  own  the  machinery  of  distribution 
and  operate  it  in  their  own  interests.  Here  is  the  thorough- 
going remedy  for  the  distributive  problem  of  A  consumer- 
the  consumer.  By  these  means  wiser  selection  x^m^the^o'nXy 
is  facilitated,  pure  goods  are  assured.  The  cure 
very  lowest  costs  are  made  possible  and  the  consumer  is 
sure  he  is  not  exploited. 

Will  it  work?  It  has  worked  for  about  three-quarters  of 
a  century,  is  working  now  for  tens  of  millions  of  people  and 
has  grown  faster  during  the  past  three  years  than  ever 
before.  Starting  in  a  small  and  humble  way  seventy-three 
years  ago  in  England  the  growth  has  been  steady  and 
stable  until  now  over  a  quarter  of  the  population  of  the 


8o  CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 

United  Kingdom  own  and  operate  the  distributive  ma- 
chinery through  which  they  are  furnished  with  a  billion 
dollars'  worth  of  goods  per  year.^ 

It  can  truly  be  said  that  the  successful  operation  of  dis- 
tribution by  consumers  is  practically  sure  where  the  known 
The  co-oper-  Conditions  and  methods  of  successful  conduct 
ative  plan  in  are  met.  The  plan,  the  origin  and  details  of 
which  will  be  given  later,  is  simply  the  owner- 
ship by  consumers  of  the  machinery  of  distribution, — local 
stores,  and  the  other  agencies  as  far  back  toward  producers 
as  seems  desirable,  and  the  operation  of  these  facilities, 
not  for  profit,  but  for  the  advantage  of  consumers;  all 
economies,  after  paying  expenses,  including  interest  on 
capital,  to  revert  to  the  consumers  buying  the  goods. 

In  effect,  the  consumers  get  together  and  unite  their 
requirements,  enough  of  them  joining  to  buy  in  large  quan- 
tities at  the  lowest  wholesale  prices,  preferably  of  original 
producers.  In  this  way  the  man  sent  to  buy  can  be  an 
expert  judge  of  the  goods  and  prices,  can  make  laboratory 
tests  of  articles  bought  and  buy  to  the  very  best  advantage. 

Organized  consumers  are  not  only  in  a  position  through 
buying  collectively  greatly  to  reduce  the  cost  of  what  they 
consume,^  but  acting  as  a  unit  they  become  powerful  in 

'  For  record  in  detail,  see  later  chapters,  especially  Chapter  XXIV. 

^  Acting  collectively  consumers  can  hasten  such  remedies  for  the 
high  costs  of  living  as  Dean  Frank  W.  Beakmore  of  the  University  of 
Kansas  points  out,  as  follows: 

"Let  the  Government  check  the  decline  in  the  purchasing  power  of 
gold  by  taking,  automatically,  seigniorage  of  the  bullion  that  is  be- 
hind the  dollar,  thus  leaving  the  value  of  the  dollar  stable  and  allowing 
the  weight  to  vary  with  the  rise  and  fall  of  average  price. 

"Induce  more  people  to  engage  in  the  production  of  raw  material. 

"Introduce  scientific  intensive  agriculture  in  order  to  double  pro- 
duction per  acre. 

"Revise  the  tariff  by  scientific  treatment. 

"Introduce  simpler  and  less  expensive  methods  of  bringing  the 
commodity  to  the  consumer. 

"Educate  people  in  the  principles  and  habits  of  true  economy,  thus 
doing  away  with  extravagance  and  waste." 


THE  HOPE   OF   THE   CONSUMER  ol 

many  ways  to  bring  about  justice  to  consumers.^  (For  in- 
stance, organized  consumers  might  stem  the  tide  of  in- 
justice due  to  the  constantly  falling  purchasing  power  of 
the  dollar.)  Thus  are  wholly  eliminated  the  j^^^^^^^s  the 
evils  caused  by  the  propulsion  of  the  selling  cause  of  the 
machinery  by  profit.  The  cause  being  re-  ®^ 
moved,  the  ill  results  disappear. 

Through  Rochdale  co-operative  organization  of  con- 
sumers, American  buyers  can  undoubtedly  solve  their 
problems  when  they  have  come  clearly  enough  to  see  the 
e\^ils  of  the  profit  system  of  distribution  and  the  advantages 
of  substituting  a  system  in  which  the  wrong  motive  is  re- 
placed by  the  right  and  natural  one. 

When,  through  co-operation,  the  push  of  the  profit  maker 
is  superseded  by  the  pull  of  the  normal  balanced  demand 
of  the  consimier,  he  will  no  longer  have  forced  Co-operation 
upon  him  through  well-nigh  hypnotic  influences  ^fser  seiec- 
the  many  things  which  he  would  be  better  off  tion 
without;  nor  have  his  choice  deflected  to  the  buying  of 
wrong  things.  Each  normal  need  and  desire  of  the  con- 
sumer will  have  a  fair  hearing  since  there  will  be  no  profit 
motive  incessantly  to  obtrude  certain  pushed  articles.  The 
removal  of  the  din  of  aggressive  advertising  and  salesman- 
ship and  the  relegation  of  these  agencies  to  their  proper 
place  will  make  for  a  better  "balanced  ration"  for  the 
whole  man.  With  the  disappearance  of  the  profit  motive 
and  its  disproportionate  pushing  of  certain  articles,  facili- 
ties for  wiser  selection  will  be  evolved  to  the  immense  ad- 
vantage of  the  consumer. 

How  the  problem  of  debased  goods  and  short  measure 
will  be  solved  by  an  agency  run  for  and  by  consumers  is 
obvious.     Such  an  agency,  under  the  direction  Overcomes 
of  salaried,  professional  buyers  freed  from  the  !Sod.'°sK 
bias  of  private  profit  is  the  solution  offered  weight  evUs 
by  the  co-operative  buying  system. 

"In  my  opinion,"  says  Dr.  Wiley,  "the  desire  for 
profit  is  the  sole  motive  for  adulteration  and  debasement. 
If   that    principle   could   be   eliminated    from    the    food 


82  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

trade,  all  adulteration  and  debasement  would  naturally 
cease." 

In  a  co-operative  store  where  private  profit  is  unknown, 
there  can  be  no  temptation  to  debase  goods  in  any  way. 
For  the  purchasers  at  the  store  are  also  the  owners. 

The  co-operative  manager  is  the  professional  purchasing 
agent,  hired  and  retained  by  the  store  society  to  do  its 
buying,  run  its  store,  and  act  as  its  impartial  goods  expert. 
He  is  a  buyer,  an  executive  and,  most  of  all,  a  trained  food 
specialist  capable  of  carrying  his  inspection  further  than 
that  of  the  housewife,  however  careful  she  may  be.^ 

The  manager  and  his  staff  cannot  defraud  their  clients, 
the  consumer-owners,  except  by  plain  steaUng  or  receiving 
bribes  from  parties  of  whom  they  buy,  which  is  a  wholly 
different  matter,  rarer,  more  easily  detected  and  punished 
than  the  crime  of  debasing  goods,  and  because  it  is  clean- 
cut,  a  far  less  insidious  influence. 

The  manager's  interests  are  identical  with  those  of  con- 
sumers; he  buys  for  them  as  a  trust  with  rights  and  duties 
clean-cut,  and  he  is  free  from  all  incentive  to  the  practice 
of  petty  deceptions. 

With  the  successful  establishment  of  the  co-operative 
system  will  automatically  come  the  end  of  the  short  measure 
and  impure  food  problems. 

How  Co-operation  Reduces  Costs 

As  to  the  cost  to  the  consumer,  it  is  doubtful  if  civilized 
men  and  women  do  anything  else  in  the  world  so  ineffi- 
ciently and  so  wastefully  as  they  do  their  retail  buying. 
The  average  consumer  is  ignorant  of  qualities  and  values, 
dickers  over  dimes,  plays  hide-and-seek  with  the  man 
behind  the  counter  whose  business  as  an  expert  it  is  to 
get  all  the  profit  he  can  out  of  the  trade.  The  merchant 
is  playing  at  his  own  game  and  he  must  win  to  live. 

The  net  profit  of  the  merchant  is  derived  from  the  sale 

1  No  longer  warned  to  "let  the  buyer  beware,"  she  is  freed  from 
anxiety  and  in  a  position  to  exercise  her  choice  of  goods  unafraid  of 
debased  goods  or  unjust  prices. 


THE  HOPE   OF  THE   CONSUMER  83 

of  articles  of  the  value  of  which  the  buyer  is  ignorant.    The 
merchant    profits    by    the    ignorance    of    the    consumer. 
Staple,  well-known  articles  pay  no  net  profit.  J***^^^"^®^^ 
Concealed  profits  are  collected,  as  it  were,  when  profits  at  the 
the   consumer  is  not   looking.      Toll  is  taken  l"^^^^^^^  ^nd 
while    the    buyer's    back    is    turned.     This    is  consumer 
not  due  to  dishonesty  on  the  part  of  the  merchant,  it  is 
simply  a  necessary  incident  of  the  concealed  profit  system 
working  under  competitive  conditions.     It  is  an  evil  and 
anti-social  system   that  often  attracts  to   the  profession 
men  who  take  to  that  sort  of  thing,  and  even  tends  to  pro- 
duce that  sort  of  men. 

Contrast  this  with  co-operative  bu>ing  under  which, 
instead  of  figuring  on  a  few  cents'  worth,  the  consumer 
joins  thousands  of  other  consumers  and  sends  co-operation 
his  trained  expert  to  buy  from  primary  sources  jJ°t'^®°from'^* 
of  production  by  the  car  load  or  train  load,  producer  to 
The  co-operative  buyer,  being  a  large  buyer,  consumer 
meets  the  producer  or  wholesale  seller  upon  equal  terms. 
He  is  not  at  the  disadvantage  of  the  individual  consumer 
whose  haggling  is  futile,  but  conducts  dignified  negotiations 
and  gets  all  the  advantages  to  which  his  economic  position 
and  the  backing  of  his  large  purchasing  power  entitle  him. 

Tims  represented  by  experts,^  the  whole  merchandizing 
machinery  drafted  into  his  service,  he  is  in  a  position  to  be 
free  from  anxiety  as  to  the  honesty  of  quality  and  measure 
and  the  purchase  price  of  all  he  buys.^    "Co-operation," 

1  Danson:  Wealth  of  Households,  page  238. 

*  The  New  York  Times  of  June  16,  191 2,  gives  an  account  of  the 
installation  of  a  testing  plant  by  Commissioner  of  Accounts  Fosdick. 
Here  are  examples  of  the  value  of  testing  apparatus  to  the  city: 

"The  Street  Cleaning  Department  a  few  weeks  ago  was  offered,  for 
instance,  an  oil  at  $1  a  bottle  guaranteed  to  keep  the  hoofs  of  the 
horses  in  fine  condition.  A  bottle  of  it  sent  to  Commissioner  Fosdick's 
laboratory  enabled  him  to  inform  Commissioner  Edwards  of  the 
Street  Cleaning  Department  that  the  oil  was  about  as  good  as  any 
flther  bottle  full  of  crude  petroleum  would  be  and  was  worth  at  least 
15  cents  a  quart  in  the  retail  market. 


84  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

says  Danson,  "enables  them  (the  co-operators)  to  hire,  for 
the  common  benefit  of  many,  the  skill  so  few  possess.  This 
brings  them  up  to  a  level,  in  the  market,  with  the  sellers, 
and  with  the  skilled  buyers,  who  are  employed  by  these 
sellers:  the  wholesale  and  retail  dealers.  .  .  ."  Note  that 
this  buyer,  once  for  all,  judges  of  qualities  and  values  and 
the  consumer  need  not  do  it  over  after  him.^  There  is  no 
further  need  to  dicker,  for  the  final  consumer  gets  the  goods 
at  what  the  car  load  buyer  paid  plus  only  the  necessary 
and  openly  given  expenses  of  bringing  them  to  the  place 
of  consumption.  In  the  case  of  the  individual  consumer 
buying  of  the  profit  merchant,  the  goods  probably  passed 
through  several  hands,  each  acting  as  a  dam  to  obstruct 
the  flow,  and  each  raising  the  price.  Under  co-operation 
the  woman  who  buys  four  ounces  of  tea  in  Wales  is  us- 
ing the  services  of  her  selected  purchasing  expert  who  buys 
by  the  thousand  chests  in  Japan.  Between  the  Japanese 
grower  and  the  Welsh  consumer  there  is  not  a  single  middle- 
man's profit  nor  any  lost  motion.  Under  this  progressive 
system  the  consumer  thus  buys  his  supplies  at  as  low  a 
price  and  under  the  same  laboratory  tests  as  does  the 
Pennsylvania  Railroad  or  the  U.  S.  Steel  Corporation, 
the  consumer  paying  in  addition  to  the  initial  cost  only 
the  bare  necessary  expense  of  handling.  All  lost  motion  is 
cut  out:  what  the  consumer  pays  the  producer  gets,  less 
only  such  expenditure  as  is  necessary  for  physical  handling 
of  the  goods  or  is  voluntarily  incurred  to  render  service  to 
the  consumer.  In  either  case,  the  items  of  expense  entering 
into  the  final  cost  are  recorded  and  public.  By  this  system 
consumers  are  relieved  of  the  burden  of  hundreds  of  mil- 

" Similarly,  a  large  shipment  of  a  'boiler  compound'  was  sent  to 
the  Charities  Department,  guaranteed  to  prevent  deposits  on  the 
interior  of  the  boilers  used  in  the  steam-heating  plants  at  the  various 
city  situations.  A  test  in  the  laboratory  made  it  clear  that  the  Com- 
missioner of  Charities  would  do  well  to  box  coarse  salt  for  the  purpose, 
as  that  was  about  all  he  was  getting  in  the  'compound.'" 

1  In  Chapter  IV,  I  have  discussed  the  waste  involved  in  the  selling 
and  re-selling  process  under  the  present  system. 


THE  HOPE   OF   THE   CONSUMER  85 

lions  of  dollars  spent  each  year  in  this  country  to  persuade 
them  to  buy,  as  well  as  through  the  cost  of  what  they  un- 
wisely buy  through  aggressive  salesmanship. 

The  wastes  from  rotting  on  farm  or  pier  would  be  largely 
avoided  since  the  numerous  profit  barriers  between  pro- 
ducer and  consumer  would  be  removed  and  instant  demand 
created  by  putting  prices  to  consumers  as  low  as  the  nat- 
ural situation  would  justify.  Since  a  large  part  of  the 
price  of  perishables  is  made  up  of  profits  it  is  easy  to  see 
how  the  profit  motive  fails  to  meet  the  problem  of  a  glutted 
market.  The  pull  of  the  consumer's  need,  through  a  system 
which  cuts  out  net  profits,  would  move  the  goods. 

How  much  less  will  distribution  cost  co-operatively  done 
than  it  now  docs  under  the  profit  system?  There  is  not 
sufficient  experience  or  data  in  the  United  Extent  of 
States  to  furnish  a  valid  basis  for  an  answer  savings 
to  this  question.  This  much  is  certain:  through  co-opera- 
tion consumers  can  serve  their  own  suppHes  at  the  exact 
cost  of  wholesale  buying,  plus  that  of  transporting  and 
breaking  up  into  small  quantities,  and  there  is  no  way  on 
earth  in  which  it  can  be  done  for  less  cost. 

Co-operation   clears,    straightens   and   makes   free   and 
downgrade  the  channel  from  producer  to  consumer.    The 
co-operator,  unlike  the  middleman,  has  a  direct  interest 
in  removing  crooks  and  dams.     The  miasmatic  co-operation 
marshes  of  deception  wliich  line  the  way  also  the  shortest 

rr^i  1         .  f  i-        route  possible 

disappear.     The    advantages    of    co-operative 
bu>ang  are  so  real  and  so  many  that  it  is  hardly  conceiv- 
able that  American  people  will  not  insist  upon  the  new 
order  when  its  benefits  are  clearly  seen. 

If  to  the  possible  sa\'ings,  by  reducing  the  cost  of  the 
wholesale  and  retail  middleman's  work  by,  say,  fifteen  per 
cent  of  the  retail  price,  be  added  the  avoidance  of  such 
unwise  choice  as  is  induced  by  persuasion  and  the  waste 
of  adulteration  and  short  measure,  it  seems  to  me  within 
bounds  to  estimate  that  the  total  saving  would  be  equal 
to  at  least  one-quarter  of  all  ive  now  pay  for  commodities. 

In  the  following  chapters  I  set  forth  more  fully  the  prin- 


86  CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

ciples  of  the  co-operative  buying  plan.  Then  I  want  to 
ask  the  reader  whether  the  principles  are  sound  and,  if  so, 
whether  they  should  not  work,  and  cannot  be  made  to 
work  in  this  country  in  view  of  the  success  with  which  they 
have  been  applied  abroad,  and  the  enormous  advantages 
which  flow  therefrom. 

But  the  co-operative  organization  is  not  limited  in  its 
function  merely  to  reducing  the  expense  and  curing  the 
evils  of  dealers.  It  can  reach  back  to  the  producer  and  act 
collectively  in  meeting  monopoly  or  similar  adverse  condi- 
tions. ^ 

The  animating  motive  of  the  co-operative  society  is 
wholly  unhke  that  of  the  profit  store  company.  It  does 
not,  strictly  speaking,  sell  goods  at  all:  it  is  rather  a  mutual 
buying  agency. 

We  have  seen  that  the  profit  dealer  must  employ  expen- 
sive men  to  push  sales  in  order  to  sell  people  not  only  goods 
they  know  they  want,  but  goods  they  would  not  buy  unless 
pushed  upon  them.  The  co-operators'  agency,  on  the 
other  hand,  has  its  goods  practically  sold  when  they  are 
bought,  so  that,  once  well  established,  statistics  as  to  re- 
quirements largely  take  the  place  of  guess  work  as  to  the 
quantity  to  buy  and  the  selling  tends  to  do  itself.  These 
are  two  reasons  why  it  costs  less  to  distribute  co-operatively 
than  it  does  in  the  speculation-for-profit  way. 

What  I  am  claiming  for  co-operation  is  based  upon  the 
assumption  that  co-operation  is  properly  established  and 
efl5ciently  carried  on.    The  passing  of  a  store  from  private 

1  It  can  instantly  refrain  from  buying  the  article  which  is  cornered 
until  the  price  drops.  For  instance,  the  large  soap  makers,  incited 
by  private  dealers,  declined  to  sell  to  the  Co-operative  Wholesale 
Society  of  Manchester.  As  a  result,  the  "C.  W.  S."  is  now  one  of  the 
largest  soap  producers  in  the  world.  And  because  the  London  tea 
importers  became  too  independent,  the  co-operative  people  now  own 
extensive  tea  estates  in  Ceylon. 

This  explains  how  plain  working  men,  inexperienced  in  guessing  and 
in  high  pressure  selling,  have  built  up  in  the  United  Kingdom  a  busi- 
ness of  a  billion.    See  Beatrice  Potter:  Co-operalim  in  Great  Britain. 


THE  HOPE  OF  THE  CONSUMER  87 

ownership  to  consumer  ownership  will  not  necessarily  bring 
about  real  co-operation.    Such  change  will,  however,  make 
the  improvements  possible,  re-locate  the  motive  savings  of 
and  bring  to  bear  the  proper  incentive.    The  efficiency  go 

P      .       ,  .         ^  ^.  ,  iU     to  consumers 

great  pomt  is  that  m  a  co-operative  store  the 
results  of  all  economies  go  automatically  to  consumers, 
while  in  a  private  store  most  of  such  savings  go  to  swell 
middlemen's  profits.  The  imperative  need  of  the  consumer 
is  to  have  goods  purveyed  by  improved  methods  and  ap- 
pliances and  to  have  the  financial  advantages  of  these 
inventions  reach  his  pocket.  Organized  consumers  have  the 
incentive  so  to  simplify  distribution  as  to  reduce  the  cost, 
since  their  system  includes  a  ratchet  which  returns  the 
savings  to  the  consumer-members.  The  private  dealer 
has  not  this  incentive.  That  system  best  suits  the  private 
trader  which  gives  him  most  profit,  not  that  system  which 
saves  for  and  serves  the  consumer.  There  is  an  economic 
law  which  insures  that  all  improvements  of  a  system  which 
show  economy  tend  to  pass  the  major  portion  of  such 
savings  to  the  owners  of  the  machinery.  In  present-day 
distribution  these  owners  are  the  middlemen.  The  chain 
store  or  mail  order  house,  if  these  are  really  more  eco- 
nomical methods  of  distribution,  will  show  correspondingly 
increased  profits  to  their  owners.  Hence  it  is  that  big 
houses  in  these  lines  are  able  to  pass  to  dividends  the  high 
rate  of  from  eight  to  eleven  cents  of  each  dollar  of  sales. 
Let  the  consumer  become  the  owner.  ^ 

Of  the  ethical,  social  and  economic  by-products  of  the 
co-operative  system,  whereby  the  evil  results  of  competi- 
tion for  profits  are  automatically  removed  by  removing 
this  cause,  we  write  in  Chapter  X.  But  now  let  us  get  a 
closer  view  of  Rochdale  co-operation,  its  origin,  organiza- 
tion and  methods. 

1  "When  all  denunciations  have  stopped,  when  all  protests  have 
ended,  when  all  investigations  have  been  made  of  the  high  cost  of  living 
the  intelligent  investigator  will  be  forced  to  the  conclusion  that  co- 
operation is  the  only  possible  and  lasting  cure  for  the  evil."— John  H. 
Walker,  President  State  Federation  of  Labor  of  Illinois. 


CHAPTER  VI 
THE  ROCHDALE  PLAN 

Capital  should  not  hire  men  and  by  reason  of  such  relation  count 
men  as  servants.  On  the  contrary,  men  should  hire  capital  and  treat 
it  as  a  servant." — ^Justice  Louis  D.  Brandeis,  U.  S.  Supreme  Court. 

In  this  chapter  I  wish  to  outline  the  Rochdale  plan  of 
organization,  an  invention  which  has  enabled  people  to 
think  co-operatively  and  to  bring  to  pass  results  important 
in  themselves  and  rich  in  promise  to  consumers  and  to 
society. 

When,  in  1844,  twenty-eight  old  weavers  in  Rochdale, 
England,  decided  to  join  forces  and  start  a  store,  they  had 
very  definite  ends  in  view.  About  their  first  step  was  to 
study  out  a  form  of  organization  which  would  enable  them 
to  work  together  and  attain  those  ends.  By  becoming  their 
own  merchants  they  sought  to  get  only  honest  goods  and 
to  save  for  themselves  such  portion  of  the  merchants' 
profits  as  was  not  necessary  to  pay  out  in  actual  expenses 
of  handling  the  goods.  They  desired  that  each  man  should 
have  and  retain  an  equal  voice  in  the  control  of  the  business 
even  though  some  might  contribute  more  capital  than 
others.  They  did  not  wish  to  earn  profits  but  to  enable 
each  to  get  his  goods  at  the  wholesale  cost  with  nothing 
added  except  the  necessary  expense  of  handling  them.  At 
that  time,  however,  there  was  no  form  of  organization  de- 
vised which  would  enable  them  to  do  these  things,  much 
less  a  law  under  which  to  incorporate. 

The  following  plan  was  worked  out,  and  it  has  proved 
to  be  one  of  the  most  valuable  social  instruments  ever  in- 
The  Rochdale  Vented.  First,  capital  with  which  to  do  business 
Plan  -^a^s   subscribed   by   consumer  members,    each 

taking  one  or  more  shares  of  stock  as  is  the  case  with  an 


THE   ROCHDALE   PLAN  89 

ordinary  joint-stock  company.  Second,  in  the  control  of 
the  business  of  the  company  each  stockholder  of  the  society 
had  but  one  vote  for  directors,  etc.,  even  though  he  might 
own  more  than  one  share  of  stock.  Voting  had  to  be  in 
person,  not  by  proxy.  Third,  the  earnings  of  capital  were 
limited  to  a  rate  equal  to  the  prevailing  rate  of  interest  on 
money.  Fourth,  the  selling  prices  of  goods  to  individual 
members  were  made  substantially  equal  to  those  prevailing 
in  the  community  where  the  store  was  located.  Fifth,  the 
surplus  above  the  cost  of  doing  business  was  used:  first,  to 
form  suitable  reserves;  second,  to  pay  dividends  or  interest 
on  stock  holdings;  and,  third,  the  balance  was  returned  to 
members  in  proportion  to  their  purchases.  Sixth,  cash 
sales  only  were  permitted.^ 

Capital  was  recognized  as  a  necessary  servant,  employed 
and  paid  wages,  as  such,  but  not  treated  as  a  master  con- 
trolling the  business  by  its  vote  and  appro-  capital  paid 
priating  the  profits.    In  fact,  the  use  of  capital  ^^^es 
was  treated  as  an  expense  except  that  as  an  expense  it  was 
discriminated  against  by  not  being  allowed  any  interest  if 

*To  illustrate:  Assume  that  a  store  society  with  $10,000  capital 
has  sold  goods  to  its  members  in  the  year  amounting  to. . .  .$100,000 

Made  a  gross  profit  of $25,000 

Paid  expenses  of 15,000 

And  has  what,  in  an  independent  store 

would  be  a  net  profit  of 10,000 

The  distribution  of  gains  might  be  about  as  follows: 

Reser\'e  for  education $500 

Other  reserve 500 

Interest  on  stock,  6% 600 

Dividend  on  purchases,  8%  or.  .  .8,000 

9,600 


Surplus $     400 

A  member  who  owned  $50  in  stock  and  had  purchased  goods  to 

the  amount  of  $500  would  receive  dividend  on  stock,  6% $  3 

8%  on  purchases 40 

Total $43 


90  CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

the  returns  from  the  business  in  any  year  were  not  suf- 
ficient to  pay  the  interest — that  is,  the  other  expenses  were 
met  first. 

And  still,  capital  has  seemed  to  be  abundantly  forth- 
coming on  these  terms.  In  many  societies  the  interest 
Working  man  rate  has  been  reduced  in  the  efi"ort  to  check  the 
himse?f'*as"a  accumulation  of  capital.  There  is  here  an  im- 
consumer  if  portant  fact,  namely,  that  a  workingman  may 
ducer^  *  ^^°'  not  be  able  to  finance  himself  as  a  producer, 
but  in  a  great  majority  of  cases  can  furnish  the  capital 
with  which  to  become  his  own  middleman  or  distributor. 
For  example,  if  a  man  buys  $400  worth  of  goods  per  year 
at  a  co-operative  store  which  turns  its  capital  eight  times 
a  year,  he  would  need  to  own  only  $50  worth  of  stock  to 
be  in  fact  his  own  merchant — that  is,  to  furnish  sufiicient 
capital  to  finance  his  $400  of  purchases.  This  $50  he  could 
save  in  a  single  year  with  the  average  dividend  paid  by  the 
British  stores.  Does  this  not  point  a  way  for  the  working- 
man  to  independence  and  dignity,  which  is  worth  careful 
consideration? 

Voting,  the  Rochdale  pioneers  thought,  should  be  done 
by  men  and  women,  not  by  money  as  in  the  ordinary  capi- 
"One  man,  talist  company.  Moreover,  the  member  must 
one  vote  "  show  his  interest  in  the  matter  voted  upon  by 
ocratir  con™'  coming  to  the  meeting;  this  led  to  the  rule  of 
^"■o'  no  proxy  voting.    To  this  was  added  the  "one 

man,  one  vote"  rule  which  made  it  impossible  for  control 
of  a  society  to  become  concentrated  in  few  hands. 

These  provisions  for  securing  democratic  control  have 
undoubtedly  contributed  greatly  to  the  success  of  the 
movement.  This  rule  of  voting  has  further  justification  in 
the  fact  that  the  member  of  a  society  is  more  important  as 
a  buyer  at  the  store  than  as  a  stockholder,  and  his  interest 
in  the  management  is  greater  on  account  of  his  purchases 
than  by  reason  of  his  stock  holdings.  At  all  events,  the 
vote  by  persons  and  not  by  shares  has  worked  well  and  is 
fully  in  keeping  with  the  fraternal  spirit  which  inspires  co- 
operation.    In  our  political  democracy  we  have  adopted 


THE  ROCHDALE   PLAN  91 

this  principle  unqualifiedly  by  abandoning  after  trial  the 
property  qualification  for  voting  and  giving  every  man 
one  vote  regardless  of  how  much  wealth  he  has  at  stake 
in  the  community's  or  nation's  policies. 

I  have  said  that  the  co-operators  desire  to  make  no 
profit  on  their  goods,  and  yet  they  require  that  when  goods 
are  obtained  at  the  store  the  individual  mem-  ^^^.^  '^''' 
ber  shall  pay  in  an  amount  equal  to  regular  purchases 
retail  prices.  Why  should  the  member  not  ^/ther^than'* 
pay  for  his  goods  only  wholesale  cost  and  a  cut  prices 
proper  allowance  for  expenses?  This  plan  of  turning  over 
goods  at  current  retail  prices  and  returning  the  excess  above 
cost  and  expense  in  the  form  of  a  dividend  on  purchases 
constitutes  the  keystone  of  the  arch  constructed  by  the 
Rochdale  pioneers.  The  members  sought  to  obtain  their 
goods  without  any  profit  added,  but  had  learned  from 
many  failures  that  to  try  to  arrive  at  this  figure  in  advance 
was  to  court  disaster.  So  they  hit  upon  the  plan  of  making 
a  price  which  was  about  the  average  in  other  stores  and 
asking  the  member  to  deposit  that  amount  until  proper 
accounting  was  made  when  the  excess,  as  nearly  as  it  was 
practical  to  figure  it,  was  returned  in  the  form  of  a  dividend 
on  purchases.  This  plan  makes  for  stability,  strengthens 
credit,  avoids  needless  demoralization  and  antagonism 
among  profit  competitors  and  has  many  other  points  to 
recommend  it. 

Goods  were  sold  only  for  cash.  We  can  imagine  that 
the  old  mill  hands  must  have  had  strong  reasons  for  this 
rule  for  they  themselves  were  doubtless  sorely  Cash  only 
tempted.^  Their  little  capital  of  $144  was  scraped  together 
a  few  pennies  a  week  while  some  of  them  doubtless  knew 
what  unsatisfied  hunger  meant.  But  they  had  in  mind 
both  the  good  of  the  member  and  the  success  of  the  store. 
Among  the  worst  evils  of  the  time  was  buying  on  credit. 
It  was  bad  for  the  consumer  and  bad  for  any  store  which 

^"Insisting  also  upon  cash  pavTnents,  the  Pioneers  helped  their 
fellows  to  break  the  almost  universal  fetters  of  debt."  Redfern: 
Story  of  the  Co-operative  Wholesale  Society,  10. 


92  CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

did  not  heavily  tax  the  consumer  to  make  losses  good.  It 
did  not  treat  members  alike.  It  required  extra  expense 
to  manage  and  keep  accounts. 

This  in  brief  is  the  form  of  organization  which  the  Roch- 
dale pioneers  invented,  the  value  of  which  they  so  amply 
demonstrated  and  which,  under  their  eager  propaganda, 
they  saw  adopted  by  community  after  community.  The 
seventy-four  years  which  have  elapsed  since  they  launched 
it  have  seen  it  making  enormous  strides  and  spreading 
from  land  to  land.  They  were  humble  men  and  almost 
unknown  to  fame,  but  they  deserve  credit  for  one  of  the 
greatest  economic  advances  of  the  nineteenth  century. 
Of  the  subsequent  development  of  the  movement  a  brief 
history  is  given  in  Part  IV,  but  here  it  remains  to  point 
out  how  this  same  principle  is  applied  in  uniting  stores  to 
work  together  for  their  common  interest. 

It  is  advantageous  to  obtain  supplies  for  the  stores  in 
the  largest  possible  quantities.  For  this  reason  the  various 
The  second  ^o^al  store  societies  unite  to  form  wholesale 
step— whole-  societies  to  deal  with  original  producers  and 
sale  societies  production.  The  Co-operative  Wholesale  So- 
ciety of  Manchester,  England,  and  the  Scotch  Co-operative 
Wholesale  Society  of  Glasgow  were  formed  and  are  owned 
by  the  local  stores.  They  are  managed  democratically  as 
are  the  local  societies.  The  local  societies  send  delegates 
to  meetings  which  elect  directors  to  supervise  these  great 
institutions. 

The  wholesale  societies  which  do  an  enormous  business 
in  furnishing  goods  to  local  stores  have  depots  for  purchas- 
ing in  various  parts  of  the  world.  They  also  manufacture 
numerous  Hnes  of  products. 

By  reason  of  the  completeness  of  its  operation  Lord 
Rosebery  was  moved  to  refer  to  the  co-operative  movement 
as  "a  state  within  a  state,"  and  the  great  Gladstone  said, 
"There  has  not  been  a  better  thing  done  in  this  country, 
in  my  opinion,  than  the  establishment  of  co-operation." 
Thus,  the  possibility  and  practicability  of  replacing  the 
profit  maker  control  of  distribution  by  the  consumer  control 


THE   ROCHDALE   PLAN  93 

has  been  demonstrated  beyond  the  shadow  of  a  doubt, 
and  England's  leading  economist,  Prof.  Marshall,  says 
that  he  regards  co-operation  as  "unique  among  all  the 
achievements  that  have  been  wrought  in  the  history  of  the 
world." 

The  organizations  in  France,  Germany,  Switzerland, 
Belgium,  and  other  continental  countries  are  similar  to 
those  in  Great  Britain.  Reference  is  here  made  Rochdale  or- 
to  this,  though  a  fuller  account  is  given  else-  l^f^^^^^^ 
where,  to  call  attention  to  the  fact  that  the  various  kinds 
Rochdale  form  of  organization  of  consumers  is  °^  enterprises 
adapted  to  all  kinds  of  enterprises  which  are  conducted  in 
the  interest  of  the  consumers. 

A  group  may  only  operate  a  modest  buying  club,  may 
run  a  bakery  or  a  store  or  a  factory  or  a  farm  or  may  feder- 
ate to  carry  on  any  similar  or  more  extensive  undertaking, 
and  the  plan  works  out  automatically  so  long  as  the  aim 
is  savings  to  conswners} 

Consumers  in  co-operating  are  not  limited  to  any  par- 
ticular form  of  agency  or  machinery  of  distribution.  They 
can  employ  that  which  proves  most  efficient  and  economical. 
They  may  conduct  department  stores  as  the  Belgian  and 
German  co-operators  do,  or  chain  stores  as  the  Nelson 
Co-operative  Society  is  doing  in  New  Orleans,  or  any 
other  form  of  distributive  agency.  They  may  store  service 
invent  new  machinery.    Again,  they  may  buy  simple  or 

.     ^,  i.    •        1  u  11      elaborate 

m  the  most  simple  manner,  every  member  really 
waiting  upon  himself  at  practically  no  expense  to  the 
agency,  or  they  may  conduct  an  elaborate  store  giving  the 
most  complete  and  perfect  service.  It  is  quite  possible 
that  the  most  exacting  people  may  unite  to  get  more  satis- 
factory service  than  can  be  had  from  a  profit  store,  as  men 
form  clubs  to  give  them  what  is  more  satisfactory  service 
and  facilities  than  can  be  had  at  the  finest  hotels.  The 
plan  is  endlessly  flexible.  This  form  of  organization  en- 
ables real  co-operators  to  perform  advantageously  for 
1  Producers'  co-operation  is  discussed  elsewhere,  and  is  wholly 
different  in  principle. 


94  CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 

themselves  all  sorts  of  services;  for  example,  laundries 
and  bakeries  are  increasing  rapidly  in  England  and  have  a 
few  promising  examples  in  this  country. 

As  we  come  more  and  more  to  recognize  the  exceedingly 
beneficent  things  people  can  do  for  themselves  by  acting 
together,  and  the  enormous  power  which  united  action 
brings,  Rochdale  co-operation  will  acquire  new  meaning 
for  millions  of  people  and  become  a  vital  factor  in  their 
lives.  Especially  is  this  true  now  when  human  society  is 
on  the  eve  of  being  bom  anew  into  a  larger  democracy. 


CHAPTER  VII 
THE  PASSING  OF  COMPETITION 

"If  three  out  of  four  provision  stores  to  the  block  could  be  done 
away  with  and  the  entire  trade  handled  by  one  store,  the  cutting  off 
of  duplicate  plants  would  reduce  cost  by  a  very  large  percentage." — 
New  York  Times. 

"Still  another  result  of  competition  from  which  the  consumer 
suffers  is  that  brought  about  through  competition  for  cheapness,  real 
or  supposed.  .  .  .  Besides  suffering  imposition  from  the  result  of 
such  cheapness,  consumers  are  very  effectively  and  generally  taken 
in  by  the  jugglery  of  price  cutting  and  bargain  sales — advertising  de- 
vices the  profitableness  of  which  depends  on  the  skill  with  which  their 
user  recoups  himself  after  having  taken  advantage  of  the  human 
weakness  for  getting  something  for  nothing." — Herbert  A.  Smith. 

Time  was  when  a  community  felt  fortunate  if  two  gas 
or  water  companies  would  lay  their  mains  in  the  same 
street,  thus  promising  lively  competition  and  therefore 
low  prices.  Since  consumers  have  learned  that  such 
economies  did  not  abide  and  in  the  end  they  had  to  pay 
for  all  the  pipes  of  the  rival  company  and  a  lot  more  dupli- 
cate overhead  expense  besides  that  for  the  really  used 
equipment,  such  duplications  are  no  longer  permitted  by 
city  governments. 

Now  an  equally  futile  and  foolish  thing  is  still  permitted 
where  several  times  as  many  retail  stores  as  are  needed  to 
perform  the  work  of  local  distribution  are  -v^raste  of  com- 
started  in  a  town.  Competition  between  mer-  petition  in  re- 
chants  is  in  the  last  analysis  not  what  it  is  as-  ^ 
sumed  to  be,  namely,  the  survival  of  the  merchant  who 
performs  the  best  service  at  the  lowest  cost,  but  is  a  com- 
petition in  profit  making  among  dealers.  That  dealer  sur- 
vives and  flourishes  who,  while  measurably  serving  the 


96  CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

consumer,  really  makes  the  most  money.  This  being  the 
case,  competition  fails  to  eliminate  various  costly  things 
which  the  merchant  does  and  which  do  not  serve  the  con- 
sumer but  do  contribute  to  profits.  In  the  words  of  a 
New  York  upstate  newspaper,  "There  is  no  business  evil 
worse  for  a  community  than  too  many  grocery  stores." 
It  is  only  recently  that  we  have  learned  that  unrestrained 
competition  as  a  means  of  protection  to  the  consumer  is 
not  only  well-nigh  useless,  but  is  in  fact  one  of  the  chief 
causes  of  the  high  cost  of  distribution. 

Perhaps  the  real  nature  and  evils  of  competition  in  retail 
trade  may  be  made  so  conspicuous  by  the  present  war 
policy  of  the  government  that  serious  attention  will  soon 
be  given  to  the  question  of  permanent  relief  to  the  con- 
sumer from  the  avoidable  burdens  imposed  by  the  present 
unregulated  system.  It  is  becoming  apparent  that  the 
needless  duphcation  of  stores,  each  with  its  set  of  overhead 
expenses,  is  about  the  most  obvious  cause  of  the  excessive 
expense.  The  evil  is  steadily  increasing.  In  1850  there 
were  7.51  stores  to  each  thousand  people.  In  1910  there 
were  10.92  per  thousand.  In  1850  there  was  one  grocery 
to  each  960  people,  while  in  1910  each  470  had  a  grocery. 
A  Massachusetts  legislative  committee,  in  1900,  found  in 
that  state  12,441  stores  where  food  was  sold.  Each  store, 
on  the  average,  had  $2,489  capital  and  sold  only  $14,569 
worth  of  goods  per  year.  Prof.  Richard  T.  Ely  reported 
to  the  American  Economic  Association  some  years  ago 
that  stores  were  growing  three  times  as  fast  as  the  popula- 
tion and  that  "in  food  supplies  competition  tended  strongly 
to  adulteration  and  general  inferiority." 

There  is  little  doubt  that  the  average  community  is 
burdened  by  an  average  excess  cost  of  at  least  ten  per  cent 
Economy  of  '"^y  ^eason  of  its  dependency  upon  competition 
large  plant  as  an  all-sufficient  protector  of  the  consumer, 
distribution  'pj^gj.g  jg  apparently  as  much  economy  in  dis- 
tribution through  large  plants  as  compared  with  small 
ones  as  in  manufacturing  on  a  large  scale  as  compared  with 
small.   And  yet,  while  the  large  factory  through  its  economy 


THE  PASSING  OF  COMPETITION  97 

eliminates  the  less  economical  small  one,  the  same  is  not 
true  in  retaihng.  The  difference  between  a  store  which 
sells  at  a  gross  profit  of  fourteen  per  cent  and  one  which 
sells  at  twenty-eight  per  cent  is  not  plain  enough  to  the 
consumer  to  put  the  costly  store  out  of  business.  If  in 
Massachusetts  there  were  12,441  stores  selling  food,^  averag- 
ing only  $14,569  sales  each,  there  were  probably  at  least 
10,000  stores  selling  an  average  of  less  than  $10,000  per 
year,  for  quite  a  number  of  big  food  stores  in  the  state  such 
as  the  "public  markets"  at  Worcester,  Lynn,  and  Brockton, 
Cambridge,  each  sell  hundreds  of  thousands  of  dollars 
worth  per  year.  It  probably  would  not  be  far  wrong  to 
estimate  that  the  consumers  who  bought  the  hundred 
million  dollars  worth  of  goods  of  the  small  dealers  were 
charged  at  least  ten  million  more  than  would  have  been 
necessary  with  the  efficient  conduct  of  only  the  necessary 
number  of  stores.  Each  laboring  man  was  taxed  on  his 
$400  food  bill  around  $40,  or,  nearly  five  per  cent  on  his 
wages  by  this  ill  adjustment. 

What  is  the  remedy?    How  can  needless  stores  and  the 
burdens  they  impose  be  avoided?    If  competition  between 
stores  will  not  eliminate  the  inefficient,  should  How  can 
not  some  other  way  be  found?     It  will  soon  sto^s^^be 
come  to  be  seen  that  useless  stores  are  as  burden-  eliminated? 
some  to  the  community  as  competing  public  service  cor- 
porations. 

In  Germany  the  license  system  has  been  adopted  and 
license  is  denied  to  all  wholesalers  and  retailers  who  seem 
to  the  authorities  to  be  superfluous.  In  nearly  all  our 
southern  states  business  taxes  are  levied,  wliich  undoubt- 
edly reduces  the  number  of  dealers  to  some  extent.  More- 
over, the  revenue  from  this  source,  forming  quite  a  large 
proportion  of  the  state,  county  and  municipal  receipts, 
probably  impose  little  or  no  actual  burden  upon  the  people. 
In  other  words,  the  taxes  if  not  le\'ied  would  be  largely 
offset  by  the  burdens  of  excessive  competition.  However, 
these  taxes  are  imposed  with  direct  reference  to  revenue 
'Mass.  Census,  1905. 


98  CO-OPEKATION   THE  HOPE   OF  THE  CONSUMER 

and  not  with  a  view  to  curing  the  excessive  competition 
e\al.  Prof.  Seager  favors  a  business  license  system  ^  and 
beHeves  that  without  appreciable  net  burden  to  the  con- 
sumer the  state  could  derive  a  revenue  from  such  licenses 
which  would  enable  it  to  dispense  with  direct  property 
tax.2 

However,  a  license  system  to  be  effective  in  reducing  to 
a  proper  point  the  number  and  capacity  of  retail  units 
would  need  to  take  various  things  into  account.  For  in- 
stance, the  gross  profits  charged,  average  prices  to  con- 
sumers and  general  efficiency  should  be  subject  to  official 
examination  and  report.  In  fact,  licenses  might  well  be 
given  only  to  those  who  would  contract  to  furnish  goods 
at  not  exceeding  a  certain  average  gross  profit  over  quota- 
tions in  primary  markets.  Licenses  should  only  be  given 
to  the  competent  and  financially  responsible.^ 

A  great  gain  would  be  effected  undoubtedly  if  only 
prices  at  all  stores  could  be  thoroughly  inspected  and 
Publication  of  ^^^^e  public  in  such  a  way  as  to  show  which 
food  budget  stores  are  really  offering  economies  and  which 
^""^^^  are  not.    These  figures  should  be  gathered  on 

budgets  of  standard  qualities  and  average  quantities  con- 
sumed. Take  a  week's  supply  for  an  average  family  of 
flour,  butter,  potatoes,  etc.,  say  fifty  articles  in  all,  and 
publish  the  price  at  which  the  whole  budget  was  being 
sold  at  each  store.  This  would  enable  the  housewife  to 
govern  her  purchasing  intelligently  and  not  tempt  her  to 
go  all  over  town  buying  one  article  here  and  another  there, 
or  leave  her  in  perpetual  uncertainty  as  to  whether  she 
were  buying  advantageously.  And  it  might,  if  persistently 
carried  out,  so  swing  trade  to  the  efficient  stores  that  others 
would  be  eliminated. 

There  are  stores  of  a  certain  class  which  depend  for 
their  success  upon  confusing  or  foohng  the  consumer.  Low 
prices  are  conspicuously  quoted  on  certain  well  known 

1  Seager:  Introduction  to  Economics,  page  560. 

*  See  Nystrom:  Economics  of  Retailing,  Chapter  XIX. 

^Nystrom,  page  353. 


THE   PASSING   OF   COMPETITION  99 

staples  which  are  so  famih'ar  to  every  woman  that  she 
knows  the  usual  prices.  These  articles  are  used  as  baits 
to  get  people  to  the  store  and  to  convey  the  impression 
that  everything  in  the  store  is  equally  cheap.  But  while 
these  low  prices  are  made  prominent,  hundreds  of  articles 
in  the  store,  mostly  of  unknown  brand  and  quality,  are 
sold  at  good  round  margins  of  profit.^  In  the  words  of 
Justice  Brandeis,  U.  S.  Supreme  Court, 

"When  a  trade-marked  article  is  advertised  to  be  sold 
at  less  than  the  standard  price,  it  is  generally  done  to  at- 
tract persons  to  the  particular  store  by  the  oflfer  of  an 
ob\'iously  extraordinary  bargain.  It  is  a  bait — called  by 
the  dealers  a  'leader.'  But  the  cut-price  article  would 
more  appropriately  be  termed  a  *  mis-leader;'  because 
ordinarily  the  very  purpose  of  the  cut-price  is  to  create  a 
false  impression." 

The  so-called  chain  stores  are  famous  for  this.  They  have 
certain  economies  which  must  be  admitted,  but  probably 
the  element  of  fake  in  them  is  large. 

The  ideal  arrangement  for  a  town,  as  I  see  it,  would 
be  the  organization  of  a  strong  and  efficient  co-operative 
society  to  conduct  food  distribution  with  all  The  ideal  food 
figures  audited  and  made  public  by  the  munic-  distributor 
ipality. 

Now,  what  can  be  done  through  co-operative  buying 
about  the  evils  of  competition?  It  looks  to  me  as  though 
the  co-operative  plan  were  so  inherently  eco-  How  can  co- 
nomical  and  advantageous  that,  properly  or-  °hr*evUs*^or 
ganized,  it  is  bound  to  make  headway  against  competition? 
them.  To  be  sure,  the  mere  price  advantage  may  not  be 
sufficiently  marked  to  win  the  support  of  the  superficial 
and  thus  insure  a  dominating  position.  So  long  as  present 
trade  practices  prevail,  the  sellers  of  most  reliable  goods 

^  This  trick  gives  a  widespread  impression  of  cheapness.  The  sec- 
retary of  a  prominent  stale  food  invcsligating  commission  recent!}'  said 

to  me  with  much  positiveness,  "I  know  that  chain  stores  sell 

cheap  because  I  just  bought  a  cake  of  Ivory  soap  at  two  cents  less 
than  the  dealer  across  the  street  charged." 


lOO         CO-OPERATION   THE   HOPE   OF   THE    CONSUMER 

at  lowest  costs  are  not  sure  to  survive.^  But  undoubtedly 
co-operation  with  the  judicious  use  of  the  license  system  in 
which  licenses  should  be  granted  only  to  those  agencies  in 
the  best  position  to  serve  the  community,  would  solve  the 
problem.  Or,  if  prices  were  canvassed  and  published  as 
suggested  above,  the  well  organized  co-operative  should 
be  in  a  position  to  remedy  most  of  the  evils  of  competition. 
Again,  co-operation  plus  the  education  which  must  go 
with  it  and  the  loyalty  of  members  based  upon  mature 
judgment,  should  make  the  co-operative  plan  irresistible, 
by  reason  of  its  inherent  economies. 

But  what  prospect  is  there  that  consumers'  co-operation 
can  gain  a  foothold  in  this  country  against  intrenched  and 
powerful  competition?  What  does  it  matter  how  co- 
operation would  advantage  distribution  unless  it  can  con- 
quer competition?  These  are  fair  and  pertinent  questions, 
and  he  would  be  bold  indeed  who  would  assert  unequivocally 
that  consumers'  co-operation  can  and  will  prevail. 

But  I  should  not  be  writing  this  book  did  I  not  firmly 
believe  that  co-operation  can  win.  Let  me  give  as  briefly 
Reasons  for  ^^  ^^Y  ^c  some  reasons  for  this  conviction, 
faith    in   the  In  the  first  place,  I  believe  that  distributive 

ultimate    sue-  .  .11  e  ^i 

cess  of  CO-  agencies  operated  by  consumers  can,  from  the 
operation  nature  of  the  case,  be  conducted  at  lower  cost 
to  the  consumer  than  can  competitive  stores.  For  the 
latter  incur  various  expenses  to  be  paid  by  consumers 
which  are  unnecessary  in  co-operative  distribution. 

The  first  of  these  is  net  profit.  The  big  chain  stores, 
mail  order  houses  and  department  stores — all  of  which 
are  claimed  to  be  efficient  and  economical  distributors — 
seem  to  make  net  profits  available  for  dividends  to  owners 

1  "Competition  has  developed  the  art  of  selling  along  lines  very 
unlike  those  which  the  old-time  economic  theory  recognized.  Custom 
may  be  attracted,  or  extracted,  in  many  ways  besides  that  of  offering 
the  consumer  what  is  really  in  his  best  interest.  The  man  who  suc- 
ceeds is  the  man  who  understands  how  to  apply  salesmanship  most 
advantageously  from  the  standpoint  of  profitableness  to  himself." — 
Herbert  A.  Smith. 


THE   PASSING   OF' COMPETITION  lOI 

amounting  to  four,  six  and  even  ten  per  cent  on  their  total 
sales.  ^  Probably  it  would  be  fair  to  say  that  after  paying 
six  per  cent  on  capital  required,  the  average  efficient  large- 
scale  dealer  makes  five  cents  net  profit  out  of  each  dollar 
the  consumer  pays  him.  This  five  per  cent  under  equal 
efficiency  could  be  saved  to  consumers  through  co-operative 
distribution. 

The  net  tax  upon  the  consumer  is  due  to  the  fact  that 
efficient  modern  distributive  agencies  are  engaged  not 
merely  in  supplying  goods  wanted  by  consumers,  but  also 
in  creating  demand  and  pushing  goods  upon  consumers. 
This  push  costs  money  which  has  to  be  paid  by  consumers. 
The  money  is  spent  for  advertising  and  persuasive  sales- 
manship of  other  kinds.  It  would  probably  be  conservative 
to  estimate  this  tax  upon  the  consumer  at  another  five 
per  cent.  Now,  I  recognize  the  fact  that  money  spent  by 
both  manufacturers  and  merchants  for  advertising  and  sales 
pushing  often  so  increases  sales  as  actually  to  reduce  the 
percentage  of  selling  expense  below  what  it  would  be  with- 
out the  use  of  these  aggressive  methods.  But  to  this  I 
reply  that  the  successful  establishment  of  co-operation 
implies  the  bringing  to  bear  of  the  voluntary  "pull"  of 
the  consumer's  desire  to  make  unnecessary  that  part  of 
sales  expense  which  is  incurred  to  push  goods  against  the 
resistance  made  up  of  the  consumer's  suspicion,  indiflerence, 
inertia,  and  better  judgment.  That  part  of  sales  stimulation 
which  is  included  in  the  giving  of  needed  information  to  the 
consumer  would  be  retained  under  co-operation.  I  estimate, 
therefore,  that  the  consumer  is  avoidably  burdened  with 
a  cost  of  at  least  five  per  cent  on  account  of  aggressive 
selling.  2 

*  Based  upon  such  figures  as  are  published  in  financial  prospectuses, 
annual  reports,  etc.  Sears,  Roebuck  &  Co.  made  net  profits  of  over 
12  per  cent  on  sales  for  the  year  1916. 

2  The  justification  for  estimating  this  particular  five  per  cent  is 
not  essential  to  the  argument.  The  rate  of  tax  is  based  upon  con- 
sideration of  numerous  isolated  data,  but  a  fairly  satisfactory  guess 
is  possible  if  one  assumes  that  salesmanship  of  one  kind  and  another 


I02         CO-OPERATION  THE   HOPE   OF   THE   CONSUMER 

A  third  tax  which  competition  levies  upon  the  consumer 
would  not  show  in  final  cost  figures  but  is  as  real  an  impost. 
The    well-     J  refer  to  the  miscarriages  in  selection  due  to 

established  .  i    i  r  j   i  . 

co-operative  ovcr  pcrsuasion  and  losses  irom  debasement 
competes  sue-  q^^x^  short  mcasure  of  goods.     These  probably 

cessfully  with  .    ^.         ,  i-         i  ^         r 

the  profit  store  inilict  damage  of  at  least  another  five  per  cent. 
We  may  assume,  therefore,  that  if  consumers  in  this  country 
average  to  pay  fifty  cents  for  bringing  to  them  that  for 
which  the  primary  producer  gets  fifty  cents,  then  that 
fifty  per  cent  for  distribution  could,  by  co-operation,  be 
reduced  in  the  retail  corporative  account  to  not  more  than 
thirty-five  per  cent.  This  estimate  of  the  economy  of  co- 
operative distribution  may  not  be  correct:  these  advan- 
tages and  all  others  connected  with  retailing  may  not 
amount  to  more  than  ten  per  cent — or  they  may  amount 
to  twenty.  The  exact  percentage,  however,  is  not  material. 
Here,  at  any  event,  is  a  decided  economic  disadvantage 
under  which  competitive  merchandizing  is  carried  on. 

But  whatever  this  gain  of  co-operative  purveying,  this 
would  not  be  decisive,  for  statistics  show  that  there  now 
exist  side  by  side  agencies  which  give  widely  different 
average  price  advantages  to  consumers.  The  more  costly 
still  exist  and  often  the  really  efficient  go  under  because  of 
lack  of  appreciation  of  the  savings  to  consumers  which 
they  make  possible. 

As  I  examine  my  own  state  of  mind  and  try  to  account 
for  the  hope  which  leads  me  to  spend  so  much  thought, 
Intangible  labor  and  anxiety  over  co-operation,  I  am 
sU)"e^through  strongly  reminded  that  this  hope  is  not  based 
co-operation  SO  much  upon  the  material  advantages  of  the 
new  order  of  distribution  as  upon  the  intangible  bene- 
fits possible.  I  am  persuaded  that  when  people  learn 
to  think  co-operatively  they  will  resent  the  idea  of  per- 
mitting to  stand  between  them  and  the  source  of  their 
supplies  a  procession  of  men  who  reap  concealed  profits  by 

makes  up  lo  per  cent  of  the  retail  price,  and  that  of  this  expenditure 
one-half  (a  large  allowance)  goes  to  inform  the  consumer,  and  the 
remaining  half  5  per  cent  to  persuade. 


THE   PASSING   OF   COMPETITION  IO3 

acting  in  their  own  interest  regardless  of  the  welfare  of  the 
consumers.  When  a  product  leaves  the  ownership  and 
control  of  the  producer  and  before  it  reaches  the  owner- 
ship of  the  consumer  it  is  sailing  by  a  sort  of  dead  reckon- 
ing in  which  the  log  is  not  revealed.  It  is  uncomfortable  to 
lose  sight  of  the  history  of  the  orphaned  craft  and  not  to 
know  what  happens  to  nor  why  and  how  much  it  is  taxed. 
We  have  an  unsatisfied  desire  to  know  all  about  the  things 
we  buy:  where  they  come  from,  how  they  are  produced, 
how  much  in  detail  they  cost  and  why.  We  want  to  believe 
the  things  we  use  pass  through  clean  hands,  that  there  is 
in  my  food  the  flavor  of  good  will  conferred  by  the  pro- 
ducer and  handler.  And  I  somehow  feel  that  this  feeling 
is  shared  by  the  majority  of  consumers. 

Is  there  any  agency  whatever  which  can  bring  about 
such  conditions  and  service  except  the  consumer-owned 
store,  conducted  not  for  profit,  but  solely  for  service? 
When  once  we  have  really  had  the  vision  of  what  a  co- 
operative store  can  do  for  the  consumer  not  alone  by 
curing  the  evils  to  which  I  have  referred,  but  by  construc- 
tively going  forth  to  anticipate  and  answer  our  material 
needs,  will  not  many  of  us  strive  till  we  get  it.  Such  a 
store  is  as  much  more  satisfactory  than  the  profit  store  as 
democracy  is  more  satisfactory  than  autocracy. 

Not  only  can  co-operators  buy  as  cheaply  at  wholesale 
as  the  competitive  store,  can  get  as  far  back  towards  the 
source,  but  they  have  a  distinct  advantage  in  influence  on 
knowing  more  definitely  what  and  how  much  ^^°^^  *^®'p 
to  buy.  The  co-operative  store  can  perform  the  physical 
work  of  purveying  as  economically  as  the  competitive  store. 
It  has  the  advantage  of  simpler  and  cheaper  operation, 
and  all  these  ideal  sources  of  strength.  What  does  it  lack 
to  enable  it  to  compete  with  the  competitive  store?  Many 
of  my  readers  will  say  it  lacks  the  one  vital  thing;  namely, 
the  management  and  initiative  which  can  only  be  enlisted 
by  hope  of  private  gain.  In  the  co-operative  store  the 
workers  and  manager  cannot  hope  to  own  the  store  nor 
an  interest  in  it,  nor  even  to  get  large  bonus  from  profits. 


104         CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

There  are  only  two  things  a  co-operative  store  worker  can 
be  sure  of:  a  fair  salary  and  an  opportunity  to  serve.  Pos- 
sibly capable  workers  cannot  be  enlisted  without  the 
hope  of  profit.  Perhaps  the  world  is  not  yet  old  enough 
to  have  answered  that  question.  But,  for  my  part,  I  be- 
lieve that  the  finest,  best  and  greatest  things  are  done  in 
this  world  without  the  hope  of  material  reward.  To  say 
nothing  of  professional  work,  civic  and  social  work,  philan- 
Growth  of  thropic  work,  teaching,  preaching,  even  in 
social-mind-  business  to-day,  as  I  interpret  men,  the  very 
mot?ve  in  bus-  best  work  is  inspired  by  other  than  pecuniary 
iness  motives.     I   therefore   believe   that   there   are 

plenty  of  young  men  and  women  who  are  ready  to  respond 
to  the  challenge  which  democratic  distribution  will  make. 
Will  they  not  rise  when  opportunity  offers,  and  go  into 
the  work  with  a  wholeheartedness  and  devotion  which 
money  alone  cannot  incite. 

My  reader  may  not  respond  to  these  reasons  why  co- 
operation will  prevail  and  may  think  there  have  been 
given  elsewhere  parenthetically,  so  to  speak,  stronger 
reasons.  But  these  are  mine  and  it  gives  me  satisfaction 
to  set  them  down. 


CHAPTER  VIII 
SALESMANSHIP  AND  CO-OPERATION 

"Advertising  is  perhaps  the  most  important  problem  on  which 
Business  is  now  turning  the  searchHght  of  special  inquiry.  Probably 
no  great  world  force  has  grown  so  much  as  advertising  in  the  past 
few  years.  Thinking  people  everywhere  are  eager  for  a  better  under- 
standing of  this  great  power  that  touches  almost  everything  that  man 
eats,  wears  or  uses."— W.  C.  D'Arcy,  President,  Associated  Adver- 
tising Clubs  of  the  World. 

"Advertising  has  achieved  more  of  high  and  worthy  results  in  the 
last  decade  than  in  the  preceding  centuries  since  the  days  when  the 
pleasure  of  the  perfumed  bath— with  the  side  attractions  of  athletic 
sports  and  the  slaughter  of  wild  animals — were  advertised  by  a  tablet 
hung  on  the  walls  of  Pompeii." — Forrest  Crissey. 

Human  industry  is  largely  devoted  to  securing  the  prod- 
ucts of  mine,  forest,  fishery  and  farm,  shaping  them  for 
our  use  and  displaying  them  for  our  choice.  Tens  of 
thousands  of  articles,  the  fruits  of  science,  invention  and 
industry  in  bewildering  variety  are  laid  before  us  for  our 
selection.  The  bounties  of  nature  from  all  parts  of  the 
earth  are  brought  to  our  shores.  Millions  of  men  produce 
thirteen  billions  of  dollars  worth  of  farm  products,  and 
twenty-seven  billion  dollars  of  factory  output  in  a  normal 
year  in  this  country.  Everything  that  heart  could  wish, 
materially  speaking,  is  laid  at  our  feet. 

Few  people  realize  how  far  their  welfare  and  happiness 
depend  upon  what  they  buy,  or  do  not  buy;  how  wisely 
they  choose  between  the  necessities,  comforts  Buyer's  dif- 
and  luxuries  of  life.  This  is  true  of  the  labor-  ficuity  is  one 
ing  man  who  has  $500  per  year  to  spend  for  ° 
himself  and  family,  and  for  the  family  which  incurs  an 
annual  expense  of  thousands  of  dollars.     Man  was  not 


I06         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

made  for  things,  but  things  were  made  for  man, — a  fact 
too  often  forgotten. 

Too  often  I  spend  my  money  for  that  which  does  not 
help,  but  rather  hurts  me.  It  is  not  alone  the  money  cost, 
but  I  am  often  in  bondage  to  what  I  buy.  My  purchase 
may  take  my  time  and  strength  uselessly,  or  it  may  stare 
me  in  the  face  a  perpetual  reminder  of  my  folly.  Chosen 
perhaps  on  the  spur  of  the  moment,  my  purchase  may 
cause  a  perpetual  ill  balance  in  my  activities  or  expenditure 
of  time.  Or,  on  the  other  hand,  what  I  buy  may  yield 
abundant  satisfaction  and  contribute  to  permanent  wel- 
fare. We  are  prone  to  forget  how  far  a  purchase  may 
react  upon  our  lives.  The  very  foundation  of  wise  living  is 
the  wise  selection  of  what  we  buy,  and  wise  abstinence  from 
buying  when  that  will  contribute  more  to  life. 

As  though  the  task  of  choosing  wisely  that  which  will 
in  the  largest  degree  minister  to  our  welfare  were  not  al- 
Wise  choice  ready  hard  enough,  there  stands  between  us 
aggressive*'^  and  the  sourcc  of  the  services  and  commodities 
selling  system  we  require  ^  a  distributor  working  in  his  own 
interest  who  blurs  our  vision  or  distorts  the  products  so 
that  we  make  wrong  choices.  There  is  no  estimating  our 
loss  from  this  cause.  Such  false  reporting  on  the  part  of 
those  in  a  position  to  know  is  an  unfortunate  source  of  dis- 
traction and  confusion. 

In  a  system  of  distribution  like  the  co-operative,  con- 
Advertising  ducted  for  the  greatest  good  of  the  consumer, 
and   seUing     what  is  the  attitude  toward  present  high  pres- 

under  the  co-  n-        ^i  i        i        .  •  •  j  • 

operative  sys-  sure  Selling  through  advertising  and  persuasive 
*®™  salesmanship? 

It  is  to  the  consumer's  advantage  that  he  make  wise 
choices  and  meet  his  material  needs  at  the  lowest  possible 
cost.  To  this  end  does  he  unite  with  his  neighbors  under 
co-operation.  With  this  removal  of  the  propelling  motive 
which  moves  the  machinery  of  distribution  from  the  profit 
of  the  distributor  to  the  needs  of  the  consumer,  all  that 
which  burdens  and  hinders  the  consumer  is  eliminated, 

» Chapter  I. 


SALESMANSHIP   AND   CO-OPERATION  I07 

and  only  that  is  retained  which  actually  serves  him.  Co- 
operators  seek  to  develop  a  system  of  distribution  which 
will  include  the  dissemination  of  such  information  and 
furnish  the  simplest,  while  most  efficient,  selling  service 
to  enable  them  to  get  the  utmost  value  and  satisfaction 
for  their  money  to  the  extent  not  only  of  buying  the  right 
things,  but  also  of  refraining  from  buying  the  wrong  things. 

The  business  of  co-operative  salesmanship  and  adver- 
tising is  to  render  the  utmost  aid  in  helping  Twofold  quest 
to  solve  the  problems  of  the  consumer.  ^^  ^^«  ^^°pp" 

When  a  woman  goes  to  buy  she  desires,  first,  that  which 
best  meets  her  individual  tastes  and  wishes;  and,  second, 
that  which  offers  best  value  for  the  cost.  The  first  ques- 
tion is  personal  and  only  incidentally  can  she  be  assisted 
by  another.  The  second  question — that  of  quality  and 
price — causes  her  much  anxiety  and  trouble;  and  the 
chances  are  against  her  settling  it  to  her  best  advantage. 
Practically  no  consumer  can  be  a  good  judge  of  the  quality 
and  value  of  the  hundreds  of  things  it  is  necessary  to  buy 
in  our  day. 

But  under  co-operation  where  the  motive  of  the  salesman 
is  in  entire  harmony  with  that  of  the  consumer  the  store 
management  and  its  representatives,  the  advertising  and 
selling  force,  can  take  this  problem  entirely  off  the  shoulders 
of  the  consumer,  and  solve  it  far  better  than  she  herself 
could. 

All  this  trouble  and  vexation  of  trying  to  judge  of  quality 
and  price  which  each  buyer  goes  over  at  every  purchase, 
can  be  wholly  eliminated  by  the  co-operative  store.  Freed 
from  profit  bias,  the  whole  store  staff  is  at  the  sympathetic 
service  of  the  buying  consumer. 

And  notice  that  all  this  service  for  the  consumer,  per- 
formed by  her  co-operative  buying  agency  far  better  than 
she  could  do  it  for  herself,  is  actually  performed  at  no  net 
expense  to  her.  All  the  arguments  of  the  profit  dealer's 
salesman  to  induce  customers  to  buy  the  most  profitable 
goods  is  net  waste  to  society,  and  no  small  waste  at  that. 
Thus  the  shopper  is  freed  from  the  anxiety  of  judging  of 


I08         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

costs  and  allowed  to  exercise  judgment  on  higher  and 
more  productive  levels. 

The  object  of  the  co-operative  store  is  to  aid  its  members 
in  every  possibly  way  in  deciding  what  will  best  supply 
The  pull  of  the  their  wants  and  at  lowest  possible  cost.  The 
consumer  attainment  of  this  object  often  includes  advis- 
for  the  %\ish  ing  the  customer  against  buying  at  all,  or  ad- 
for  profit  vising  the  purchase  of  goods  which  pay  in  re- 
tailing the  smallest  margin  of  profit.  In  other  words,  the 
co-operative  store  is  a  consumers'  agency  run  solely  for 
the  best  interests  of  the  consumer.  Therefore,  its  aim  is 
not  to  sell  goods  which  will  yield  the  largest  amount  of 
profit;  it  gives  no  bonus  to  its  salespeople  for  selling  PM's 
(profitable  merchandise)  as  is  done  in  the  independent 
store.  Nor  is  its  object  to  sell  the  largest  possible  amount 
of  goods  to  each  individual  customer.  We  have  seen  that 
it  is  for  profit  that  the  distributor  spends  money  for  adver- 
tising and  sales  pushing.  What  would  consumers  do  about 
advertising  if  they  were  managing  the  machinery  of  dis- 
tribution in  their  own  interest?  Before  answering  that 
question  let  us  discuss  more  fully  the  kind  of  selling  which 
should  be  cultivated  in  the  co-operative  store  whose  aims 
are  fundamentally  opposite  those  of  the  private  dealer. 
Is  there  in  the  co-operative  any  such  thing  as  salesman- 
ship? Not  if  by  salesmanship  is  understood  "the  power 
to  persuade  people  to  purchase  products  at  a  profit."  ^ 

1  "Competition  for  business,  in  a  word,  has  created  a  special  branch 
of  applied  psychology.  Success  in  retail  trade  depends  quite  as  much 
on  skill  in  making  people  buy  what  they  would  not  take  or  come  for 
of  their  own  motion  as  it  does  on  efficiency  in  the  operations  involved 
in  putting  goods  on  sale.  Specialists  spend  their  time  in  studying  how 
to  get  people  to  buy  more.  It  is  a  common  saying  that  the  profit  is 
made  not  on  what  the  customer  comes  to  buy  but  on  what  further  can 
be  sold  him  before  he  gets  away.  To  a  large  extent  salesmanship  is 
the  art  of  playing  upon  human  weakness  to  overcome  the  healthy  re- 
luctance of  a  man  or  woman  with  a  dollar  in  hand  to  give  it  up.  Em- 
ployees are  coached  in  the  use  of  the  most  conciliatory  methods  of 
winning  the  patronage  of  the  public,  and  rewarded  for  deftness  in 
accelerating  the  flow  of  the  golden  stream  which  has  its  small  sources 


SALESMANSHIP  AND   CO-OPERATION  lOg 

Co-operative  salesmanship  is  a  thing  of  large  responsi^ 
bility  and  large  privileges:  the  salesman  actually  puts 
himself  in  the  consumer's  place.  To  perform  ordinary 
the  service  properly  requires  training  and  in-  ^g'^^^f^^o/^g 
telligence.  The  salesman  is  in  effect  a  special  co-operative 
lecturer  and  expert  adviser  upon  the  commodi-  salesman  ^ 
ties  which  he  handles.  He  should  be  able  to  advise  as  in- 
telligently and  in  as  unbiassed  a  spirit  as  does  the  doctor 
or  the  minister.  He  should  know  his  goods,  human  needs 
and  co-operation.  Into  this  work  he  can  put  his  whole 
soul  without  selfish  reserve.  He  can  speak  with  the  ut- 
most frankness,  tell  the  whole  truth  and  nothing  but  the 
truth.  It  is  his  privilege  to  render  the  highest  service,  that 
of  helping  his  client  to  the  best  use  of  his  hard-earned 
money,  and  he  can  look  his  client  in  the  eye  with  that  dig- 
nity and  independence  which  come  from  the  consciousness 
that  his  motives  are  unselfish.  This  new  relationship 
creates  an  atmosphere  in  which  full-blooded,  straight- 
spined  men  and  women  can  fully  express  themselves  and 
develop  life  and  strength  accordingly. 

It  is  not  a  small  matter  to  be  a  part  of  an  institution  the 
aims  of  which  are  to  minister  to  the  lives  of  its  members 
to  that  degree  which  is  possible  in  aiding  workers  to  trans- 
late their  wages  into  forms  which  will  yield  the  most  real 
satisfaction. 

The  salesman  will,  in  the  first  place,  know  as  much  as 
possible  about  the  nature,  utility  and  merits  of  the  goods 
he  handles.  He  will  describe  his  goods  in  Goods  should 
attractive  terms,  placing  them  before  the  cus-  J^p^f^ngiy^'^ 
tomer  as  an  accomplished  hostess  would  serve  but  not  ex- 
a  dinner  to  her  guests;  goods  are  appetizingly  travagantiy 
but  not  extravagantly  described.  The  faults  of  an  article 
should  always  be  stated  as  well  as  its  merits;  in  fact,  more 

in  the  customer's  purse  and  its  wide  mouth  in  the  employer's  till."  — 
Herbert  A.  Smith. 

Says  a  writer  in  the  Co-Operative  Consumer,  "Good  salesmanship 
is  only  the  art  of  making  the  consumer  nod  his  head  when  he  wants 
to  shake  it." 


no         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

scrupulously.  At  the  same  time,  in  the  interest  of  the  con- 
sumer as  well  as  store  expense,  customers  should  be  aided 
as  much  as  possible  in  coming  to  a  decision  quickly.  The 
salesman  should  take  up  a  subject  where  the  consumer's 
knowledge  leaves  off  and  make  the  information  as  com- 
plete as  possible. 

But  while  the  chief  business  of  the  salesman  is  the  giving 
of  information  to  the  consumer,  he  should  not  be  called 
True  function  upon  to  give  information  orally  which  could 
of  advertising  ^^ore  economically  be  given  by  printing.  Thus, 
advertising  adapted  to  the  co-operative  aim  has  an  im- 
portant service  to  perform.  One  of  the  most  important 
parts  of  distributing  goods,  at  present  the  most  expensive, 
is  the  giving  of  information  about  the  goods.  Articles 
produced  to  meet  human  need  are  very  numerous  and 
intricate,  and  new  ones  are  appearing  constantly.  We 
never  know,  when  we  go  to  the  store,  whether  something 
new  has  been  produced  since  we  last  bought,  something 
which  will  better  or  more  cheaply  meet  our  need.  There 
are  constant  modifications  of  products,  grades  and  quali- 
ties are  altered  and  shade  off  into  each  other  in  a  way  to 
baffle  the  layman.  How  important,  then,  to  be  informed 
and  to  be  informed  without  bias! 

The  true  function  of  advertising — "setting  forth,"  as 
the  word  means — is  to  inform  the  consumer  about  com- 
modities. General  information  can  be  given  through  ad- 
vertising more  economically  than  through  the  salesman, 
while  special  information  as  to  a  particular  purchase  must 
be  given  by  the  salesman.  To  illustrate:  in  marketing 
shoes,  the  advertising  should  tell  about  the  style,  the 
leather,  the  construction  and  give  such  other  useful  informa- 
tion as  appUes  to  all  the  shoes.  But  questions  about  tender 
feet,  fit,  etc.,  must  be  met  by  the  salesman  who  is  also 
competent  to  confirm  and  amplify  the  general  information. 
The  work  of  enlightenment  is  so  divided  that  the  salesman 
takes  it  where  advertising  leaves  it. 

Of  course,  advertising  is  written  solely  in  the  interest 
of  the  consumer.     The  "ad"  writer  and  the  salesman  are 


SALESMANSHIP  AND   CO-OPERATION  III 

in  the  same  position  as  a  friend  or  professional  adviser. 
They  will  advise  with  no  bias  whatever,  as  one  would 
advise  a  member  of  one's  own  family. 

It  goes  without  saying  that  all  suggestion,  command, 
reiteration  and  persuasion — the  staples  of  profit  advertis- 
ing— would  be  avoided.  The  writer  of  a  guide  ^p■^^■^^  ^f ,,  go- 
book  of  travel  advises  the  traveler  what  to  operative " 
carry  and  what  not  to  be  encumbered  with;  ^  '^'^'^'"s 
what  to  buy,  and  what  not  to  buy,  and  always  with  en- 
thusiasm for  the  scenery  and  the  journey.  It  is  in  this 
spirit  that  advertising  for  co-operators  should  be  conceived, 
inspired  and  executed.  Such  advertising,  while  recognizing 
and  displaying  the  merits  of  an  article,  would  not  unduly 
magnify. 

Advertising  in  the  co-operative  buying  system  would 
be  far  more  effective  than  ordinary  advertising.  It  would 
be  more  convincing;  the  reader  would  trust  it  Reason  for  its 
because  he  would  come  to  know  that  from  ^°*  '^°^* 
first  to  last  it  was  free  from  the  profit  bias.  The  expense 
would  thus  be  reduced  to  a  minimum,  for  distrust  adds 
enormously  to  the  expense  of  private  advertising.^ 

Thus  informative  advertising  and  salesmanship  can  be 
so  used  as  greatly  to  reduce  the  expense  of  selling  by  hasten- 
ing the  flow  of  goods  through  a  store,  and  thus  lowering 
the  percentage  of  handling  expense.     Salesmanship  is  the 

*  "I  think  the  greatest  cause  of  waste  in  advertising  is  in  the  fact 
that  too  large  a  section  of  the  pubHc  is  still  skeptical  about  it.  Too 
many  people  are  still  in  the  attitude  of  mind  to  say,  'Oh,  that  is  only 
what  advertising  says;  but  it  docs  not  prove  anything.'"— Hugh 
Chalmers. 

One  serious  obstacle  to  distribution  through  profit  merchandizing 
is  that  the  conveyance  of  information  through  advertising  salesman- 
ship, and  so  on,  meets  the  resistance  of  suspicion  and  distrust.  When 
the  maker  of  an  article,  or  the  merchant,  praises  his  wares— whether 
honestly  or  not — the  consumer  is  aware  that  the  praise  has  a  selfish 
motive,  namely,  to  make  the  sale.  It  is  not  infrequent  that  the 
prospective  buyer  wholly  discounts  what  the  salesman  claims.  .And 
the  advertisement  is  distrusted  and  its  claims  discounted  even  more 
than  are  the  claims  of  the  salesman. 


112         CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

most  costly  factor  in  most  stores,  so  that  if  consumers  are 
sufficiently  well  posted  and  quickly  enough  informed  by 
salesmen  to  enable  them  to  do  their  buying  in  half  the 
time,  a  corresponding  saving  is  made.  Not  only  this,  but 
almost  all  expenses,  including  rent,  insurance,  etc.,  are  cut 
down  in  the  same  ratio.  Thus,  advertising  and  salesman- 
ship of  the  co-operative  kind  should  be  used  to  serve  the 
consumer,  not  only  directly,  but  indirectly  by  reducing 
the  cost  of  handling  his  goods.  Practical  suggestions  are 
made  on  these  subjects  in  Part  III  in  connection  with 
store  administration. 

To  sum  up,  then,  co-operation  would  avoid  the  enor- 
mous waste  due  to  persuasive,  non-informing  advertising  and 
salesmanship,  but  would  give  much  more  real  information 
to  consumers  regarding  things  buyable.  By  co-operative 
distribution  the  consumer  would  not  only  not  be  persuaded 
to  buy,  but  would  be  guarded  against  buying  foolishly; 
for  here  all  advertising  and  salesmanship — like  the  whole 
work  of  distribution — would  be  conducted  solely  to  serve 
the  consumer. 


CHAPTER  IX 
THE  DEBITS  OF  CREDITS 

"Annual  income,  £20;  annual  expenditure,  £19.19  6d— result, 
happiness.  Annual  income,  £20;  amiual  expenditure,  £20.  os.  6d — 
result,  misery." — Mr.  Micawber. 

There  are  three  classes  of  consumers  who  ^jj^^g  classes 
ask  for  credit  instead  of  paying  cash  for  their  of  credit  cus- 

,  i-    ^      o  tomers 

goods. 

First,  there  are  the  well-to-do  who  prefer  to  avoid  the 
trouble  of  paying  cash  for  each  purchase  at  the  time  it  is 
made.  They  save  some  time  and  annoyance,  especially 
when  buying  at  a  modern  department  store  where  they 
have  to  wait  for  a  certain  amount  of  red  tape.  It  is  much 
more  convenient  to  order  goods  delivered  and  charged, 
return  anything  not  wholly  satisfactory,  getting  credit  for 
it,  and  sending  a  check  once  a  month.  This  class  of  people 
usually  have  the  money  to  pay  at  any  time  and  so  do  not 
care  for  the  deferred  paj-ment  as  a  loan.  Merchants 
solicit  their  charge  accounts,  knowing  from  experience  that 
the  customer  will  buy  more  on  credit,  as  a  rule,  than  he 
would  buy  if  paying  cash;  also,  that  he  is  more  likely 
to  buy  steadily  at  the  store  at  which  he  has  a  running 
account.^ 

The  second  class  is  those  consumers  who  think  it  a  hard- 
ship to  pay  for  goods  when  bought  because  it  is  easier  to 
wait  until  pay  day  or  for  the  receipt  of  money  from  some 
other  source.  There  is  a  certain  percentage  of  these  who, 
through  unexpected  misfortune  will  fail  to  pay  promptly 
and  some  fail  to  pay  at  all.    With  a  very  large  percentage 

1  The  big  stores  have  come  to  vie  with  each  other  in  urging  persons 
to  open  accounts. — Massachusetts  Commission  on  Cost  of  Living. 


114         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

of  this  class  buying  on  credit  is  an  easy-going  habit  and 
could  be  overcome  with  decided  profit  and  satisfaction  to 
the  consumer  by  the  temporary  exercise  of  a  reasonable 
measure  of  self-denial.  In  the  long  run  it  is  much  better 
and  more  comfortable  for  members  of  this  class  to  be 
abreast  of  the  time  rather  than  to  lag  one,  two  or  more 
weeks  or  months  behind. 

The  third  class  of  people  who  buy  on  credit,  if  they  can 
get  trusted,  are  people  who  buy  without  knowing  where 
the  money  is  coming  from  to  pay,  or  are  reasonably  certain 
when  they  buy  that  they  will  not  pay.  This  class  is  happily 
small  and  all  merchants  hope  to  avoid  them.  But  experience 
proves  that  they  do  not. 

Bad  debts  are  said  to  vary  from  one  to  four  per  cent  of 
the  gross  sales  of  the  ordinary  store.  Some  well  managed 
stores  are  able  to  get  the  percentage  of  loss  down  to  less 
than  one  per  cent.^ 

The  co-operative  spirit  is  opposed  to  the  idea  of  selling 
on  credit  and  most  such  stores  have  rigid  rules  against 
it.  But  it  takes  back-bone  to  enforce  the  rule  in  some 
cases,  and  the  back-bone  in  the  management  is  sometimes 
lacking. 

'  "Four  years  ago  the  Bureau  of  Statistics  of  Labor  undertook  an 
investigation  of  noncollectiblc  indebtedness,  or  'bad  debts,'  in  Boston. 
The  whole  number  of  dealers  reporting  was  1,183,  ^^^  the  number  of 
debtors  reported  72,540.  The  total  amount  of  non-collectible  in- 
debtedness was  $1,064,384.  Of  this  amount,  $704,433,  or  66.18  per 
cent.,  was  owed  by  the  wage  earning  class;  $276,116,  or  25,94  per  cent, 
by  the  trade  class;  $49,990,  or  4.70  per  cent,  by  the  professional  class; 
and  $33,845,  or  3.18  per  cent,  by  the  moneyed  class. 

It  was  impossible  to  obtain  the  number  of  duplications  among  the 
72,540  persons.  The  same  person  may  have  become  indebted  for 
groceries  in  different  parts  of  the  city  or  at  different  stores  in  the  same 
part  of  the  city;  but  it  was  evident,  making  a  liberal  allowance  for 
these  duplications,  that  at  least  10  per  cent  of  the  residents  of  Boston, 
in  the  year  1904,  were  indebted  for  their  food,  rent,  clothing,  furniture 
or  funeral  expenses,  and  that  the  dealers  who  gave  them  credit  had 
given  up  all  hope  of  receiving  payment  therefor."— Massachusetts 
Commission  on  Cost  of  Living,  1908. 


THE   DEBITS   OF   CREDITS  115 

Why  is  it  against  co-operative  principles  to  give  credit? 
The  first  reason  is  that  credit  dealing  costs  the  store  and, 
therefore,  the  consumer-owners  of  the  store,  Credit  deaUng 
more  than  it  is  worth  to  members.  The  cost  expensive  and 
of  selling  on  credit  includes  other  expenses  ^^"^* 
than  the  losses  from  bad  debts.  To  extend  credit  and 
watch  it  to  see  that  it  is  properly  limited  and  collection 
promptly  made  require  much  time  on  the  part  of  some 
employee  of  judgment  and  discretion.  This  costs  money. 
It  requires  the  expense  of  extra  bookkeeping;  and  collecting 
costs  money  and  alienates  members.  Uncertainty  regard- 
ing collections  often  makes  it  impossible  for  a  store  of 
moderate  capital  to  take  advantage  of  cash  discounts  on 
bills. 

One  of  the  cardinal  principles  of  co-operation  is  to  treat 
all  members  aUke.  To  give  credit  to  one  and  decline  to 
give  it  to  another  or  omit  to  give  it  to  a  third  because  he 
does  not  want  it,  is  not  living  up  to  the  principle  of  equal 
treatment  of  all. 

Again,  a  co-operative  society  puts  itself  in  the  member's 
place  and  so  refrains  from  encouraging  credit  buying.  For 
a  business  man  to  take  advantage  of  borrowed  capital  in 
his  business  is  often  a  very  good  thing.  But  for  a  consumer 
to  buy  the  necessities  of  life  on  credit,  for  him  to  habitually 
eat  and  wear  things  that  are  not  paid  for  has  many  dis- 
advantages. Food  tastes  better,  actually  digests  better, 
clothing  is  warmer  and  looks  better,  to  the  one  who  knows 
that  he  ow7is  his  food  and  clothing. 

It  is  the  purpose  of  the  co-operative  store  really  to  help 
its  members,  and  in  no  way  can  it  help  them  better  than 
by  encouraging  them  to  buy  for  cash  and  thus  avoid  the 
higher  prices  necessary  in  credit  bujnng  and  the  temptation 
to  the  extravagance  of  buying  too  much. 

This  tendency  to  over-buy  is  one  of  the  gravest  evils  of 
shopping  on  credit.  If  one  must  pay  in  labor  for  what  he 
buys,  he  will  buy  less  than  he  will  if  he  pays  in  money, 
which  is  one  remove  from  labor.  But  if  he  buys  for  credit- 
twice  removed  from  labor — cause  and  effect  will  not  be  so 


Il6         CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

closely  related  in  his  mind,  and  he  will  spend  much  more 
freely. 

The  "pay  as  you  go"  plan  has  in  many  cases  in  England 
exercised  a  wonderfully  beneficent  influence  over  con- 
sumers. Improvident,  long  credit,  hard  pressed  families 
laboring  under  the  pain  and  humiliation  of  inability  to 
pay,  have  become,  under  cash  and  co-operation,  self- 
respecting,  refined  people  with  such  savings — small  though 
they  might  seem  to  many — as  make  all  the  difference  be- 
tween a  feeling  of  opulence  and  a  sense  of  poverty. 

Co-operators  are  unalterably  opposed  to  selling  to  con- 
sumers on  credit.  A  system  of  deposit  accounts  has  proved 
Deposit  ac-  Convenient  for  those  people  who  are  used  to 
count  system  having  goods  charged  and  do  not  like  the 
incidental  bother  of  paying  each  time  they  buy.  This 
simply  means  that  the  consumer  always  keeps  on  hand  at 
the  store  a  deposit  sufficient  to  cover  his  purchase  for  a 
week  or  two,  and  draws  against  this  as  he  needs  it.  This 
is  as  truly  buying  for  cash  as  payment  at  the  store  or 
C.  O.  D.  payment,  though  possibly  not  as  potent  an  en- 
couragement to  thrift. 


CHAPTER  X 
HIGHER  GAINS  AND  HUMAN  VALUES 

"It  is  a  great  thing  to  put  trade  on  the  level  of  morality.  It  is 
far  greater  to  put  competence  into  the  hands  of  honest  labor,  so  that 
every  working  household  shall  be  secured  against  dependence  or  pre- 
cariousness." — Co-operation:  June,  19 14,  page  172. 

"Our  greatness  will  appear 
Then  most  conspicuous,  when  great  things  or  small, 
Useful  or  hurtful,  prosperous  or  adverse, 

We  can  create."— Milton:  Quoted  by  Holyoake  on  title  page  of  his 

History   of  Co-operation,   Vol.   II. 

"Before  we  can  have  a  fully  developed  democracy  the  nation  at 
large  must  possess  those  moral  characteristics  which  have  enabled 
co-operators  to  introduce  democratic  self-government  into  a  certain 
portion  of  the  industry,  commerce  and  finance  of  the  nation.  It 
is,  therefore,  as  moral  reformers  that  co-operators  pre-eminently  de- 
serve the  place  in  the  vanguard  of  human  progress." — Beatrice 
Potter  :  The  Co-operative  Movetnent  in  Great  Britain,  240. 

"Co-operation  has  succeeded  in  vastly  improving  the  position  of 
millions  of  the  working  classes  by  enabling  them  to  obtain  their  pro- 
visions cheap  and  pure,  to  avoid  the  millstone  of  debt,  to  save  money, 
to  pass  from  retail  to  wholesale  trade,  and  from  distribution  to  man- 
ufacturing, building  and  house  owning,  ship  owning,  and  banking, 
above  all  to  educate  themselves  and  to  Hve  with  an  ideal." — En- 
cyclopedia Britannica:  Eleventh  Edition,  VII,  page  84. 

"The  Queen  is  glad  to  learn  of  the  success  of  a  movement  which  not 
only  encourages  thrift,  but  also  teaches  the  habits  of  business  and 
promotes  education  among  so  large  and  important  a  body  of  her 
people."— Sir  Henry  Ponsonby  for  Queen  Victoria,  on  receiving  a  copy 
of  the  Co-operative  Annual  of  1883. 

For  the  most  part  I  have  discussed  co-operative  bu>ang 
as  a  means  of  serving  the  material  interests  of  the  individual 
consumer.    Little  attention  has  been  given  to  the  influence 


Il8         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

of  co-operative  distribution  upon  the  ethical  and  sociaj 
interests  of  the  individual  and  society.  If  these  chapters 
British  em-  should  fall  into  the  hands  of  any  of  the  leaders 
sodaf  °and^^  ^^  ^^^  co-operative  movement  in  Great  Britain, 
ethical  gains  they  would  Undoubtedly  be  shocked  by  what 
they  would  regard  as  my  sordid  views  of  the  subject. 
British  co-operators  are  given  to  treating  with  more  or 
less  scorn  the  person  who  joins  the  "store"  for  selfish  rea- 
sons. If  any  of  my  readers  are  disposed  to  feel  that  what  I 
have  seemed  to  treat  as  mere  by-products  of  co-operation, 
are  in  fact  of  equal  if  not  greater  importance  than  the 
selfish  saving,  I  am  not  disposed  to  deny  it  nor  even  to 
argue  the  matter.  My  sole  purpose  in  writing  this  book  is 
to  help  get  consumers'  co-operation  established  upon  a 
solid  basis  in  the  United  States  and  to  that  end  it  has 
seemed  to  me  that  I  could  contribute  most  by  discussing 
the  practical  phases  of  the  big  subject.  It  would  take  a 
larger  book  than  this  and  a  better  equipped  writer,  ade- 
quately to  discuss  the  ethical  and  social  influence  of  co- 
operative trading.  I  hope,  however,  that  this  chapter  may 
send  some  of  those  who  read  it  on  a  fruitful  quest  in  this 
direction. 

A  popular  minister  once  argued  against  social  reform 
by  contending  that,  given  three  men,  it  made  little  differ- 
ence whether  they  stood  side  by  side  or  in  single  file  or  two 
ahead  and  one  back  or  one  ahead  and  two  back,  for  in 
whatever  combination  they  stood  they  were  still  the  same 
three  men,  and  until  they  had  been  personally  improved 
no  rearrangement  of  their  relative  positions  could  matter. 
He  might  have  been  asked  if  one  was  always  prostrate 
in  the  dust  with  the  other  two  standing  on  him,  or  if  two 
had  to  advance  carrying  the  third,  if  their  inter-relations 
would  not  in  time  have  decidedly  modified  the  dispositions 
and  capabilities  and  characters  of  all.  Tolstoi's  famous 
illustration  of  the  poor  man  carrying  on  his  back  the  ex- 
ploiting classes  of  the  well-to-do  and  educated,  who  are 
sorry  for  him  and  who  wipe  the  perspiration  from  his  brow 
and  advise  him  and  point  out  the  beauties  of  the  landscape 


HIGHER   GAINS  AND   HUMAN   VALUES  I19 

to  him,  and  do  everything  for  him  except  getting  off  his 
back,  helps  one  to  realize  that  our  social  and  economic  inter- 
relations profoundly  influence  our  hves.  If  those  who  have 
been  riding  have  to  get  down  and  walk,  and  those  who 
have  been  burdened  beyond  their  strength  are  relieved  of 
their  load,  those  of  both  classes  will  be  different  persons. 
They  can  at  least  look  each  other  in  the  eye.  A  clear- 
visioned  reformer  illustrates  this  point  by  telling  of  going 
to  the  entrance  of  Brookl>Ti  Bridge  at  the  rush  hour  and 
witnessing  the  mad  scramble  for  seats  in  the  cars.  Women 
and  children  were  thrust  roughly  aside.  Age  received  no 
consideration.  He  said  to  himself,  "What  brutes  these 
men  are."  The  next  morning  he  was  in  upper  New  York 
and  noted  how  different  men  were  in  entering  the  cars. 
They  stepped  aside  while  the  women  took  precedence.  They 
gave  up  their  seats  to  the  aged.  They  lifted  on  the  children. 
He  said  to  himself,  "How  different  these  men  are."  Then 
he  looked  again  and  saw  they  were  the  same  men — but 
under  different  social  conditions. 

The  baleful  effect  of  the  present  competitive  system  upon 
individuals  and  society  has  been  studied  in  chapter  four. 
The  effect  of  a  system  based  upon  co-operation  p^  j^g^  ^jjg. 
— the  working  together  of  all  and  especially  tnbutive  sys- 
the  consumer  and  the  dealer — remain  to  be  *™ 
set  forth.  The  three  great  factors  in  every  life  are  heredity, 
environment  and  free  will,  and  the  economic  part  of  our 
environment  is  so  all-saturating  that  if  that  makes  for 
justice  and  equahty  we  shall  be  far  on  our  way  to  the  ideal 
state.  The  domestic  relationship  alone  is  as  persistently 
present  as  the  economic,  the  political  far  less  so.  If  we 
can  replace  one  that  makes  for  division  in  society  by  one 
that  makes  for  union,  can  replace  one  that  makes  for 
economic  inequality  by  one  that  makes  for  economic 
justice,  can  replace  one  that  is  filled  with  subtle  tempta- 
tions to  deceive  and  overreach  by  one  that  encourages 
mutual  aid  and  openness  and  fair  dealing,  we  shall  have 
moral  and  social  advantages  that  will  outweigh  a  great 
economic  loss.      But  if   the  system   that  yields  a  great 


I20         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

economic  gain  also  gives  a  moral  tone  to  business  from  top 
to  bottom  and  moralizes  the  distributive  system,  we  have 
incalculable  gains.  The  golden  rule  of  competitive  business 
was  rightly  phrased  by  David  Harum  as  ''Do  unto  the 
other  fellow  what  he  is  going  to  do  to  you  and  do  it  first," 
but  the  golden  rule  of  co-operation  is  put  into  practice 
just  as  it  was  stated  by  the  practical  idealist  of  Galilee. 
Society  gains  inestimably  when  men  can  do  business  and 
women  can  go  shopping  on  the  highest  moral  plane.  It 
changes  trade  from  a  social  and  ethical  liability  into  a 
social  and  ethical  asset  and  makes  it  a  great  uplifting  in- 
fluence. 

What,  then,  are  the  by-products  of  Rochdale  co-opera- 
tive buying?  How  does  a  distributive  system  from  which 
By-products  ^^^  profiteer  has  been  removed  aflfect  the 
of  co-opera-  consumer,  the  producer,  the  present  middle- 
**°°  man  and  society  generally? 

To  the  consumer  the  advantages  of  co-operative  buying 
are  such  that  he  should  get  a  new  conception  of,  and  take 
a  new  interest  in  buying.  The  necessity  for  shopping  and 
haggling  ^  to  get  the  best  quality  and  lowest  cost  is  wholly 
eliminated  from  his  life.  He  has  delegated  that  duty  to 
his  buying  representative  who  goes  into  primary  markets 
and  gets  such  assurances  of  quality  and  cost  as  are  impos- 
sible for  the  individual  consumer.  The  consumer  is  left 
free  to  exercise  his  individual  taste  and  preference,  but  the 

^  It  may  be  urged  that  with  the  adoption  of  the  one  price  system 
such  dickering  has  been  practically  eliminated,  at  least  among  rep- 
utable dealers.  What  chance  is  there  for  bartering  when  an  article 
is  sold  at  one  price  to  all?  The  across-the-counter  bargaining  between 
the  salesman  and  the  individual  consumer  is  indeed  being  done  away 
with,  but  the  principle  is  not.  The  reputable  store  marks  an  article 
at  a  certain  price  and  the  individual  customer  must  either  pay  that 
price  or  go  away  without  it.  But  when  a  dozen  or  a  score  have  priced 
the  article  and  gone  away  without  it,  while  few— and  they  unin- 
formed— have  bought,  next  day  the  price  goes  down.  So  the  prin- 
ciple of  charging  all  an  article  will  bear  is  still  in  force  but  the  rules 
of  the  game  have  changed. 


HIGHER   GAINS   AND   HUMAN  VALUES  121 

bugbears  of  under-quality  or  over-charge  are  forever  re- 
moved. Thus  is  co-operative  buying  organized  economy 
and  economy  without  any  undignified  annoy-  Co-operative 
ances  on  the  part  of  the  consumer.  He  may  ganize^d 'econ- 
waste  in  the  unwise  exercise  of  his  own  taste,  omy 
but  whatever  he  buys  will  be  the  best  value  of  its  kind  ob- 
tainable in  the  wholesale  market.  The  consumer  is  not 
urged  to  buy  and  often  is  even  influenced  against  making 
wrong  choices.^ 

These  aids  to  economy  and  the  paying  back  of  savings 
on  cost  in  a  lump  sum  are  found  to  be  great  helps  and  in- 
centives to  thrift.  Saving  is  made  automatic  and  thrift 
easy  and  dignified.  Many  co-operators  in  England  have 
been  led  to  save  until  they  reach  the  dignity  of  small 
capitalists.  Some  have  paid  for  their  homes  out  of  divi- 
dends. As  Mr.  William  Maxwell,  president  of  the  Interna- 
tional Co-operative  Alliance,  says,  they  *'eat  themselves 
into  a  home."  The  co-operative  plan  is  a  school  in  high 
values  and  an  aid  to  the  restraint  which  makes  the  dignity 
of  a  bank  account  and  proprietorship.  To  the  laboring 
man  the  consciousness  of  ownership  in  the  store,  small 
though  the  stock-holdings  may  be,  tends  to  give  a  feeling  of 
independence  and  a  wholesome  attitude  towards  property. 

The  social  gain  can  be  estimated  only  by  those  who 
can   visualize   how  much   the  increased   spending  power 
that,  for  example,  the  three  to  four  million  co-  The    social 
operators  of  England  gain   by  the  return  of  creased  *° 
ten  or  twelve  per  cent  of  their  expenditures  spending 

.     1  ^     ,  •  1  •        r       t    1  power  for  the 

means  m  better  and  more  nourishmg  food,  better  many 
housing  conditions,  better  furniture,  more  culture,  increased 
education  and  travel.^    It  is  said  that  you  may  know  a 

*  When  the  Rochdale  Pioneers  added  a  drapery  department  to 
their  store,  it  was  decided  "that  they  should  not  provide  a  stock  of 
fancy  goods — '  bobby -dazzlers' — to  tempt  workingmen's  wives  to 
indulge  in  unnecessary  expense. — Redfem:  The  Story  of  the  Co- 
operative Wholesale  Society,  page  98. 

■'  Without  doubt  this  close  and  constant  tie  between  the  entre- 
preneur and  the  customer  accounts  fv^r  the  unmistakable  rise  in  the 


122         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

co-operator  in  the  streets  of  Lancashire  and  Yorkshire. 
The  men  are  better  fed,  the  women  better  dressed,  the 
children  are  healthy  and  plump.  Experience  has  shown 
these  returns  are  a  free  margin  to  be  used  at  will  and  that 
they  either  go  with  savings  or  with  a  higher  standard  of 
living.    They  make  thrift  possible.^ 

Co-operation  increases  equally  the  co-operators'  power 
to  help  others.  Experience  shows  that  the  co-operator 
is  not  merely  a  seeker  of  dividends.  He  is  at  trouble  to 
further  honesty  in  business  and  to  use  his  newly  won  power, 
even  at  a  sacrifice  to  himself  at  times,  to  render  his  co- 
operative enterprise  useful  to  his  neighbors  and  to  better 
the  condition  of  the  poorer  classes.  The  co-operators  have 
been  pioneers  in  the  weekly  half  holiday  movement  for 
store  workers,  and  the  higher  wages  they  pay  and  the  shorter 

standard  of  taste,  for  the  knowledge  of  real  value,  and  consequently 
for  the  stability  of  demand  that  is  characteristic  of  consumption  in  the 
co-operative  districts. — Beatrice  Potter:  The  Co-operative  Movement 
in  Great  Britain,  208. 

One  member  of  the  Rochdale  Society  had  invested  5  pounds  and 
in  II  years,  without  paying  in  anything  further,  his  dividend  accu- 
mulating from  his  purchases  made  him  the  owner  of  125  pounds. 
Another  member  had  put  in  6  pounds  and  invested  i  pound  more  and 
in  seven  years  had  no  pounds.  Many  societies  make  it  possible  for 
one  to  become  a  member  on  payment  of  one  shilling,  and  some  on 
payment  of  six  and  even  three  pence,  allowing  the  dividends  on  pur- 
chases to  pay  for  the  i  pound  share  of  stock. 

*  The  skilled  workers  who  availed  themselves  of  co-operation  and 
trade-unionism,  discovered  an  increasing  margin  between  the  cost  of 
sheer  animal  necessities  and  the  purchasing  power  of  their  wages. 
The  railway  companies  became  aware  of  the  greater  spending  capacity, 
and  cheap  trips  multiplied. — Redfem:  The  Story  of  the  Co-operative 
Wholesale  Society,  114. 

The  studies  made  by  Fay  in  his  Co-operation  at  Home  and  Abroad 
show  that  the  quarterly  payments  of  dividends  are  followed  by  in- 
creased trade  in  the  stores,  that  many  depend  on  the  dividends  to 
reclothe  the  family,  refurnish  and  generally  add  to  the  comfort  of  the 
homes.  Some  depend  on  the  dividends  to  pay  rent  and  some  to  pay 
installments  on  building  loans  through  which  they  are  purchasing 
homes. 


HIGHER   GAINS  AND  HUMAN   VALUES  1 23 

working  hours  they  require,  put  them  as  employers  in  a 
class  by  themselves.  The  Scotch  Wholesale  started  certain 
manufactures,  such  as  shirt-making,  at  an  immediate  loss, 
to  avoid  dealing  with  firms  which  employed  labor  under 
bad  conditions.  The  English  Co-operative  Wholesale 
Society  has  consistently  striven  to  minimize  the  e\'il  of 
lead  glazing.  It  has  used  its  enormous  purchasing  power 
to  support  only  the  better  employers,  put  on  sale  leadless 
glaze  ware,  and  wherever  possible  given  its  preference  to 
pots  made  by  processes  in  which  lead  is  least  used.^ 

The  Rochdale  pioneers  from  their  first  year  gave  2^2 
per  cent  of  their  profits  for  education,  and  this  example 
has  been  quite  generally  followed.  They  spent  this  money 
at  first  on  reading  rooms  and  newspapers  and  those  were 
the  days  when  newspapers  costing  four  pence  to  six 
pence  each  were  beyond  the  reach  of  the  wage  earners. 
They  established  a  school  to  teach  their  young  people 
reading,  writing  and  arithmetic,  charging  tuition  fees  of 
two  pence  a  month  per  pupil.  Libraries  and  reading 
rooms  were  valuable  adjuncts  to  co-operative  stores  until 
municipalities  took  them  over.  The  co-operators  were  the 
pioneer  advocates  and  pro\iders  of  newsrooms,  public 
libraries,  and  evening  classes.  They  have  brought  into 
countless  lives  educational  and  cultural  advantages  they 
would  not  have  possessed  otherwise — literary  and  dramatic 
circles,  lectures  and  conferences,  social  entertainments, 
travel  parties  at  home  and  abroad.  The  co-operators  of 
England  hold  two  scholarships  at  Oriel  College,  Oxford, 
of  100  pounds  a  year  each,  for  the  sons  of  co-operators. 

In  no  place  has  co-operation  been  carried  further  as  a 
mutual  aid  movement  than  in  Belgium.  Albert  Sonnichsen, 
in  an  article  on  "A  Baker  and  W^hat  He  Baked,"  in  the 
Outlook  for  December  27,  1913,  tells  a  wonder  tale  of  mutual 
help  within  the  Belgian  co-operative  movement.  This 
started  largely  around  the  bakeries  and  does  not  distribute 
its  dividends  directly  but  invests  them  in  great  Maisons 
du  Peuple  and  their  work.     During  the  distress  of  pro- 

^  Redfem:  The  Story  of  the  Co-operative  Wholesale  Society,  163. 


124         CO-OPERATION  THE   HOPE   OF   THE   CONSUMER 

longed  strikes  free  loaves  are  distributed  from  the  co- 
operative bakeries  to  the  unemployed.  Free  medical 
care  is  provided  for  the  co-operators  and  their  families. 
The  first  day  after  a  baby  is  born  a  big  cake  comes  from 
the  bakery  and  free  loaves  for  twelve  days  afterwards  and 
a  trained  nurse  is  provided  one  week  at  that  time  without 
charge  and  for  months  afterwards  she  makes  daily  visits 
to  the  mother  and  child.  Whenever  a  wedding  occurs  a 
free  wedding  cake  is  sent  to  the  bride's  home.  The  Maisons 
du  Peuple  are  great  clubhouses  for  the  people,  recreational 
and  educational  centers  with  gardens  and  which  provide 
moving  pictures,  dances  and  reading  rooms,  concerts  and 
dramas — the  plays  most  often  given  are  those  of  Maeter- 
linck. The  great  Ghent  Maisons  even  provides  a  studio 
for  Jules  Van  Biesbroek,  the  famous  Flemish  artist  and 
sculptor,  and  the  members  subsidize  him  as  he  creates  the 
new  art  of  the  labor  movement.  Children  are  exchanged 
between  sections  and  with  countries  speaking  different 
languages  that  they  may  learn  other  lands  and  other 
tongues.  Walking  tours  are  arranged  for  the  children's 
travelling  clubs,  so  that  each  evening  their  itinerary  brings 
them  to  a  co-operative  center  where  they  are  met  and 
entertained  and  distributed  among  the  homes  for  the  night 
and  joined  the  next  morning  on  their  departure  by  the 
children  of  their  hosts.  These  parties  of  older  children 
often  cross  the  frontiers  and  by  adding  only  the  cost  of 
railroad  fare  and  boat  fare  to  the  expenses,  even  journey 
to  Switzerland  and  England.  In  the  mining  districts 
whose  degradation  Zola  painted  in  his  "Germinal,"  co- 
operative uplift  has  completely  changed  the  character  of 
the  population. 

Some  day  the  story  will  be  more  generally  known  of  the 
rebirth  of  Denmark  and  later  of  Ireland  through  co-opera- 
tive agriculture.  And  a  like  miracle  will  be  recounted  by 
him  who  writes  the  story  of  what  co-operative  credit  has 
done  for  the  German  farmers,  enabling  them  to  purchase 
farm  implements  and  machinery  and  fertilizers  which  were 
once  entirely  beyond  their  reach.     And  these  gains  are 


HIGHER  GAINS  AND  HUMAN  VALUES  1 25 

being  reaped  by  the  nations  as  a  whole  in  the  better  people 
they  are  producing.  And  now  and  then  the  co-operators 
have  helped  directly  in  dramatic  ways.  The  Scotch  Co- 
operative Wholesale  loaned  half  a  million  sterling  to  the 
city  of  Glasgow  when  it  was  in  fmancial  straits  during  a 
great  panic.  And  when  Baring  Brothers  failed,  the  British 
common  people,  who  as  co-operators  had  become  capi- 
talists, advised  the  Bank  of  England  it  could  draw  on  them 
for  five  million  dollars.  During  one  of  our  great  panics 
when  no  one  had  faith  in  the  shattered  credit  of  our  capi- 
talists and  the  panic  spread  to  England,  the  competitive 
factories  shut  down  or  ran  on  short  time  and  lowered  wages. 
But  the  co-operative  factories  ran  full  time  at  usual  wages 
and  met  all  demands  of  the  retailers.  These  are  but  random 
pages  from  the  history  of  co-operation,  but  they  indicate 
the  power  to  help  others  it  gives  to  those  who  enlist  in  its 
beneficent  forces. 

Not  the  least  advantage  to  the  individual  which  would 
follow  the  removal  of  high  pressure  selling  methods  would 
be  the  elimination  of  its  materialistic  influence,  co-operation 
We   are   largely   unconscious  of   the   influence  tends  to  re- 

,  .  ,     .  1  1  •  II'  move  empha- 

which  IS  exerted  over  us  by  aggressive  selhng,  sis  from  mate- 
but  the  removal  of  this  influence  and  the  sub-  "^  ^^^s 
stitution  of  an  agency  behind  which  are  motives  and  in- 
centives in  harmony  with  the  utmost  welfare  of  the  con- 
sumer would  have  a  profound  influence  over  our  lives. 
We  are  obsessed  with  the  idea  that  money  is  all-powerful 
to  command  the  satisfactions  of  Hfe  inasmuch  as  it  is 
the  key  to  unlock  the  doors  of  material  things.  Our  at- 
tentions are  focused  incessantly  upon  material  things, 
and  their  importance  is  constantly  magnified  so  that 
we  come  to  regard  our  lives  as  dependent  upon  them; 
whereas,  when  the  total  resources  of  the  human  soul  are 
taken  into  consideration,  the  mmistry  of  material  tilings 
is  relatively  unimportant. 

The  producer  is  helped  by  co-operative  bujnng  to  the 
extent  that  his  product  is  less  taxed  on  its  way  to  the  con- 
sumer, thus  making  it  easier  for  him  to  get  fair  prices 


126         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

for  the  finished  product.  Undoubtedly  co-operative  buy- 
ing will,  in  many  cases,  give  the  producer  a  fairer  return, 
Producer  may  especially  such  produccrs  as  will  exercise  care  in 
prices*  for^hfs^  grading  and  will  so  identify  their  product  that 
goods  consumers  may  recompense  them  for  their  care. 

The  producer  is  also  helped  by  the  larger  purchasing  power 
of  the  consumer,  a  condition  brought  about  by  the  con- 
sumer's saving  of  the  wastes  and  profits  of  the  old  system 
of  distribution. 

Profit  dealers  and  their  assistants  are  in  some  respects 
in  an  unfortunate  attitude  toward  the  consumer  and  so- 
Beneficent  ciety.  Their  success  depends,  or  is  thought 
operatio°n  *on  ^Y  ^^^^  ^^  depend,  too  largely  upon  hurting 
store  workers  their  customers.  A  consumer  is  hurt  when  he 
is  caused  to  buy  what  he  ought  not  to  buy  or  pays  too 
much,  or  when  he  fails  to  get  what  he  thinks  he  is  getting 
The  temptation  is  constant,  and  the  injury  is  too  common. 
The  concealed  profit  motive  here  exerts  a  wrong  pressure 
and  is  anti-social.  Contrast  this  motive  and  attitude 
with  that  of  the  co-operative  manager  and  store  workers. 
Which  will  attract  and  make  the  better  boys  and  girls  and 
men  and  women  of  the  store  workers?  Which  is  better — 
the  mercantile  motive  or  the  motive  of  disinterested  service 
which  is  known  to  the  consumer  to  be  wholly  free  from 
sordid  selfishness?    Think  it  over.^ 

There  are  countless  honest  dealers  and  honest  clerks  in 
the  present  competitive  system,  but  the  system  tends  to 
undermine  rather  than  to  re-enforce  their  good  motives. 
Many  who  might  otherwise  be  scrupulous  find  themselves 
betrayed  unawares  by  subtle  temptations  into  compromises 
which  are  undeniably  profitable  and  are  regarded  as  legiti- 
mate by  their  competitors  and  bear  no  stigma,  but  are 
expected  by  the  public.  Too  often  the  well-intentioned 
merchant  is  like  the  cat  in  iEsop  which  was  changed  into 
a  beautiful  woman  and  got  along  without  betraying  itself 

1  Mrs.  Beatrice  Potter  Webb  says  of  the  system,  in  her  book  on 
English  Co-operation:  "You  can  tell  a  co-operative  store  man  across 
the  street  by  the  way  he  carries  himself.   Dignity  in  place  of  servility." 


HIGHER   GAINS   AND  HUMAN   VALUES  1 27 

until  a  mouse  ran  unexpectedly  across  the  table.    Personal 
profit  is  very  like  that  mouse.  ^ 

Nothing  more  beneficial  could  come  into  the  business 
lives  of  the  storeworkers  than  the  transformation  from 
competition  to  co-operation  which  would  start  them  out 
each  day  with  the  necessity  of  telling  the  truth,  the  whole 
truth  and  nothing  but  the  truth,  of  concealing  no  defects, 
of  giving  honest  weights  and  measures,  of  taking  the  point 
of  view  of  the  customer  and  seeking  his  advantage  alone 
in  every  transaction,  of  helping  him  to  buy  wisely  and 
economically.  Every  clerk  and  merchant  would  sell  to 
every  customer  as  if  buying  for  himself.  Every  incentive 
to  dishonesty  is  taken  away  by  co-operation,  for  the  cus- 
tomer is  his  own  merchant  and  if  the  clerk  deceives  him 
he  is  deceiving  his  boss.  There  is  no  place  for  dishonesty 
or  deceit  in  co-operation. 

As  co-operation  is  established  thousands  of  superfluous 
storekeepers  and  their  employees  would  be  re-  Superfluous 
leased  to  enter  the  ranks  of  producers  where  they  timVd  ^into" 
are  sorely  needed.^  producers 

What  of  the  gain  to  society  as  a  whole?  All  that  is  saved 
by  more  direct  and  simple  distribution  is  saved  to  society. 
The  British  co-operators  paid   themselves  back   savings 

» "Profit  on  price  Robert  Owen  regarded  as  the  forbidden  fruit  of 
industry — as  the  potent  poison  exciting  the  economic  man  to  fraud- 
ulent devices  and  selfish  monopoly — in  short,  as  the  origin  of  industrial 
warfare." — Beatrice  Potter:  The  Co-operative  Movement  in  Great 
Britain,  205. 

"It  is  the  province  of  Law  to  make  it  as  easy  as  possible  for  men 
to  do  right  and  as  difiicult  as  possible  for  them  to  do  wrong." — W.  E. 
Gladstone. 

2  It  is  sometimes  asked  if  it  is  not  unfair  for  a  non-profit  store  to 
compete  with  the  small  dealer  who  must  have  his  profits  to  live  on.  If 
the  dealer,  small  or  large,  must  charge  more  for  the  services  he  per- 
forms than  like  services  cost  when  performed  by  consumers  for  them- 
selves, no.  To  support  the  profit  dealer  is  to  favor  the  ineflicient  and 
wasteful  and  to  burden  the  consumer  unnecessarily.  Only  those 
willing  to  turn  back  the  wheels  of  progress  would  thus  withhold  their 
support  of  co-operation. 


128         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

last  year  of  $100,000,000.  If  the  total  retail  purchases  of 
America  were  subject  to  the  same  saving,  the  resources 
Advanta  es  to  ^^^^  conserved  would  be  enough  to  pay  the  two 
society  as  a  billion  dollar  war  tax  now  being  levied  by  con- 
^^°^^  gress.    But  what  is  more,  these  savings  remain 

in  the  pockets  of  the  consuming  millions  instead  of  either 
being  wasted  in  inefficiency  or  permitted  to  flow  into  the 
hands  of  the  already  rich.  Net  profits  have  a  way  of  gravi- 
tating to  the  center  of  society,  thus  causing  further  cen- 
tralization. At  a  time  when  economic  forces  are  sucking 
up  the  profits  of  the  circumference  of  society  and  depositing 
them  to  the  credit  of  the  millionaires,  such  a  dam  as  is 
afforded  by  collective  buying  should  surely  be  welcomed. 

It  becomes  increasingly  evident  that  co-operation  offers 
the  only  adequate  curb  on  monopolies,  the  only  sure  way 
Co-operation  of  fighting  the  trusts.^  While  our  government 
w°  ^orfi^ht-  ^^s  ^^^^  winning  technical  and  empty  vic- 
ing the  trusts  torics  over  the  great  combinations  of  centralized 
capital  which  have  resulted  in  no  loss  to  the  multimil- 
lionaires and  no  gain  to  the  consumers,  complete  and 
effective  successes  have  been  scored  over  like  combinations 
by  the  co-operators  of  Europe.  The  Scottish  co-operators 
have  had  a  severe  struggle  with  the  great  soap  makers. 
The  Scottish  Wholesale  for  years  bought  hundreds  of 
thousands  of  dollars  worth  of  the  famous  Sunlight  soap. 
Its  makers  insist  on  a  standard  price  for  it.  Some  traders' 
association  insisted  that  by  returning  the  profits  in  divi- 
dends the  co-operators  were  really  cutting  prices  and  the 
Sunlight  people  demanded  that  this  be  discontinued,  and 

1  At  an  international  co-operative  congress  held  in  Cremona,  Dr. 
Hans  Mtiller,  a  Swiss  delegate,  presented  a  resolution  calling  for  the 
creation  of  an  international  wholesale  society.  Luigi  Luzzatti,  the 
Italian  Minister  of  State,  who  was  presiding,  dramatically  raised  his 
hand  and  said:  "Dr.  Muller  proposes  to  the  assembly  a  great  idea; 
that  of  opposing  to  the  great  trusts,  the  Rockefellers  of  the  world, 
a  world-wide  Co-operative  Alliance  which  shall  become  so  powerful 
as  to  crush  the  trusts."  See  A.  Sonnichsen:  Consumers'  Co-operation; 
the  New  Mass  Movement. 


HIGHER   GAINS  AND  HUMAN   VALUES  1 29 

when  this  impossible  demand  was  refused,  they  announced 
they  would  fill  no  more  orders  of  the  co-operators.  The 
Wholesale  immediately  asked  all  the  societies  to  boycott 
Sunlight  soap,  supplied  a  substitute,  and  in  six  months 
established  a  sheep-fat  reducing  plant  in  Australia,  and  a 
soap  factory  at  home.  The  Scotch  co-operators  number 
30  per  cent  of  the  total  population  and  they  are  absolutely 
independent  of  this  great  corporation  and  Sunlight  soap 
is  never  sold  in  their  stores. 

When  twenty  of  the  great  soap  makers  of  England  tried 
to  combine  in  "a  working  arrangement"  controlling  a  cap- 
ital of  12  million  pounds,  the  newspapers  of  England  raised 
such  a  turmoil  that  the  people  of  England  found  they  had 
an  alternative.  The  Co-operative  Wholesale  had  a  soap 
works  which  was  producing  265  tons  weekly  but  this  anti- 
trust agitation  increased  its  output  to  660  tons  weekly. 
The  trust  was  dissolved.  To  regain  their  lost  trade  Lever 
Brothers  brought  thirty-eight  actions  against  co-operative 
stores  which  had  supplied  co-operative  soap  to  customers 
they  had  instructed  to  ask  for  their  articles.  The  co- 
operators  won  and  are  to-day  among  the  largest  manufac- 
turers of  soap  in  the  kingdom.  The  Wholesale  has,  since 
this  contest,  still  further  assured  its  position  by  securing 
in  Sierra  Leone,  West  Africa,  a  government  concession  for 
the  sole  right  to  erect  a  factory  and  produce  palm  oil  within 
a  circle  of  three  hundred  square  miles.  This  assures  a  supply 
of  the  raw  materials. 

The  Scottish  Wholesale  fought  a  ten  years'  struggle  with 
the  meat  dealers  who  refused  to  sell  to  the  co-operators. 
Both  parties  sent  buyers  to  Canada.  There  was  much 
litigation  but  in  the  end  the  Wholesale  was  able  to  import 
its  meat  independently.  The  Swiss  co-operators,  however, 
proved  their  power  most  convincingly  in  this  very  field. 
The  firm  of  Bell  &  Son  dominated  the  whole  meat  supply  of 
Switzerland,  and  by  a  system  of  packing  houses  and  chain 
stores  dictated  the  price  of  meat  to  everybody.  The  Swiss 
Wholesale  declared  war  on  Bell  &  Son  and  Bell  &  Son 
capitulated  and  asked  for  terms.    The  Wholesale  insisted 


130         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

that  Bell  &  Son  sell  out  to  them  and  this  was  done,  first  the 
controlling  interest  being  secured  and  then  the  private 
stockholders  bought  out.  So  now  the  organized  consumers 
of  Switzerland  control  their  own  meat  supply  and  own  their 
own  packing  houses  and  chain  stores.  This  was  not  the 
first  great  victory  of  the  Swiss  Wholesale.  When  it  under- 
took to  supply  boots  and  shoes  to  its  local  societies,  the 
shoe  trust,  the  Boot  and  Shoe  Manufacturers'  Association, 
refused  to  sell  to  them  though  willing  to  sell  to  the  local 
societies  directly.  The  Wholesale  planned  a  boot  and 
shoe  factory  and  after  it  was  bought  the  shoe  trust  offered 
to  come  to  terms  but  too  late.  This  factory  took  one- 
fourth  of  the  trade  from  the  shoe  trust  and  that  combination 
was  forced  to  dissolve.  It  likewise  forced  the  flour  trust 
out  of  existence.  And  now  the  Swiss  co-operators  are  en- 
gaged in  a  war  against  the  Chocolate  Syndicate  and  they 
are  being  supported  in  this  by  the  co-operators  of  other 
lands. 

The  Swedish  Sugar  Trust  absolutely  controlled  the 
Swedish  sugar  market  and  charged  more  for  sugar  than  its 
price  in  any  other  country.  It  crushed  out  individuals  who 
attempted  to  compete.  It  would  allow  the  Swedish  Co- 
operative Wholesale  to  sell  only  to  societies  in  the  neighbor- 
hood of  Stockholm.  That  society  decided  to  import  for 
itself  and  fight  the  sugar  trust.  The  trust  lowered  its  prices 
so  they  were  below  those  of  other  countries.  In  the  bitter 
struggle  of  price  cutting  the  Wholesale  proved  to  have  the 
greater  endurance.  The  trust  offered  to  compromise  but 
the  Wholesale  had  established  its  own  importing  depart- 
ment and  freed  all  its  societies  from  the  shackles  of  the  trust. 
The  struggle  forced  the  Swedish  Parliament  also  to  take 
legislative  action  against  the  trust,  and  break  its  control 
over  private  dealers  as  well.  The  Swedish  Wholesale  at  the 
same  time  fought  the  margarine  trust  to  a  standstill  and 
forced  it  after  a  loss  of  2,300,000  crowns  to  dissolve.  The 
Danish  co-operators  are  slowly  winning  their  fight  against 
the  cement  trust  by  establishing  their  own  cement  works. 
In  Sweden  a  concerted  effort  was  made  to  destroy  co- 


HIGHER   GAINS  AND  HUMAN   VALUES  131 

operation  by  the  competitive  forces.  One  after  another 
the  margarine  trust,  the  soap  syndicate  and  the  cocoa  man- 
ufacturers refused  to  sell  to  the  Wholesale.  Then  the  Retail 
Dealers'  Defence  Association  and  the  manufacturers  de- 
manded of  the  bank  syndicate  that  all  Swedish  banks 
should  boycott  every  co-operative  society  in  the  country. 
The  result  was  that  the  co-operators  organized  their  own 
bank  and  soon  the  Wholesale  had  enough  money  to  be  en- 
tirely independent  of  the  trusts  and  combines  against  it. 

These  struggles  are  doubtless  but  preliminary  skirmishes 
in  the  great  battle  to  the  death  between  the  autocrats  of 
industry  and  the  democrats.  The  co-operators  have  not 
lost  a  single  contest.  Their  united  capital  and  their  enor- 
mous purchasing  power  make  them  the  equals  and  the 
superiors  of  all  possible  combinations  of  monopolists  and 
profiteers.    The  world  is  being  made  safe  for  democracy.^ 

Another  vast  economic  gain  would  come  through  co- 
operative buying  from  its  positive  tendency  to  gather  and 
prevent  the  waste  of  millions  of  dollars'  worth  utilization  of 
of  produce  which  now  rots  on  the  ground  be-  the  "  Over- 
cause  the  market  is  not  in  a  condition  to  pay  ^"^^  ^ 
the  succession  of  profits  which  now  obstruct  the  way  to  the 
consumer.  Through  consumer-controlled  distribution  this 
food  would  be  moved  to  the  place  of  greatest  need. 

The  co-operative  group  affords  to  its  members  an  ex- 
cellent training  for  citizenship.    Co-operation  is  a  school  of 
democracy.    The  very  conditions  of  success  in  co-operation 
democratic  distribution  are  such  as  to  train  men  a  trainin^g  for 
for  political  democracy.     The  members  must  "  ^^°^  '^ 
forego  the  immediate  advantages  for  remoter  good,  must 

1  On  this  subject  of  the  struggle  with  the  trusts  read  Redfern:  The 
Story  of  the  Co-operative  Wholesale  Society,  pages  241-252;  Middle- 
brough:  Co-operation:  A  World-Wide  Movement,  pages  13-14;  The 
Co-operative  Consumer,  December,  1915,  pages  42-3,  and  other  period- 
ical literature,  but  especially  Albert  Sonnichsen's  two  articles,  Con- 
sumers' Co-operation,  the  New  Mass  Movement,  reprinted  from  the 
American  Review  of  Reviews  and  The  Menace  of  Co-operative  Stores  in 
Printers'  Ink,  August  7,  1913,  pages  3-8. 


132         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

exercise  restraint,  and  above  all  be  moved  by  the  spirit 
which  is  the  motto  of  the  British  movement,  "Each  for  all 
and  all  for  each." 

Organized  consumers  are  in  a  position  positively  to  in- 
sist upon  fair  labor  conditions  among  those  who  produce 
Co-operators  ^^d  distribute  their  goods.  The  spirit  of  fair 
may  insist  on  play  will  See  to  this  and  also  the  closer  relation 
and'^  sa^tary  between  producers  and  consumers  will  enable 
conditions  ^j^g  latter  to  notc  that  fair  conditions  and  san- 
itary conditions  are  wont  to  go  together,  and  one  of  the 
chief  objects  of  co-operative  distribution  is,  as  we  have  seen, 
to  insure  sanitary  production  and  distribution.  More  and 
more  people,  when  they  step  up  to  the  counter  to  buy, 
desire  to  learn  something  more  about  the  history  of  what 
they  purchase  than  the  quantity  and  price.  They  want  to 
know  how  much  oppression,  injustice  and  wickedness  are 
connected  with  its  production  and  distribution.  House- 
wives desire  that  their  food  shall  not  taste  of  starvation 
wages  paid  in  the  manufacture,  nor  trickery  and  deception 
in  the  merchandizing.  We  do  not  need  to  dwell  upon  the 
appalling  amount  of  deception  of  all  kinds  brought  to  light 
in  recent  years.  We  may,  however,  say  two  things:  namely, 
that  the  amount  of  fraud  and  dishonesty  successfully  prac- 
ticed in  preparing  our  necessities  is  way  beyond  what  most 
of  us  imagine,  and,  on  the  other  hand,  that  most  of  our 
respected  merchants  are  practically  free  from  these  grosser 
practices.  But  the  small  consumer  is  between  the  devil  and 
the  deep  sea.  If  he  seeks  for  lower  prices  he  gets  adulterated, 
or  debased,  or  diluted  articles.  If  he  seeks  cleanliness  and 
high  quality,  he  pays  excessive  prices.  He  can  get  things 
as  clean  or  pure  as  he  wants,  but  he  must  usually  pay  more 
for  them  than  they  are  actually  worth.  On  the  other  hand, 
he  can  get  things  about  as  cheaply  as  he  desires,  but  if  he 
pays  little  the  article  will  be  of  small  value.  It  is  very  dif- 
ficult for  him  to  get  what  is  at  once  right  in  quality  and  fair 
in  price. 

A  further  training  in  citizenship  is  the  responsibility  that 
co-operation  brings  to  many  of  its  members.     Every  co- 


HIGHER  GAINS  AND   HUMAN  VALUES  13;^ 

operator  has  a  voice  at  the  meetings  of  his  society.    The 
direction  of  affairs  is  delegated  to  boards  of  directors  and 
committees  and  officers  elected  by  and  from  The  adminis- 
the  members.     Twenty  thousand  men  of  the  bSness*'^'* 
working  classes  in  Great  Britain  are  serving  on  training  co- 
such  committees  and  acquiring  administrative  gfves  to°thou- 
and  business  training.    The  great  Co-operative  sands 
Wholesale  Societies,  with  their  annual  trade  of  three  hun- 
dred milHon   dollars   are   managed  entirely  by  working- 
men.^ 

The  equality  of  the  sexes  has  from  the  first  been  fun- 
dmental  in  co-operation.  The  Rochdale  pioneers  admitted 
women  to  full  membership.  They  can  serve  co-operation 
equally  in  all  the  elective  offices.  "Moreover,"  J^li^^^^if 
says  Beatrice  Potter,^  "forty  years  previous  women  as  the 
to  the  Married  Women's  Property  Act,  store  e'l"'^^  °^  "^^^ 
managers,  subfimely  indifferent  to  the  terrors  of  the  County 
Court,  habitually  refused  to  consider  the  husband  as  the 
owner  of  the  wife's  savings.  Co-operation  enables  the 
wife  and  mother  to  play  her  part  and  make  her  influence 
count  in  the  struggle  for  better  conditions  in  the  very  sphere 
which  she  understands  best  and  where  she  can  render  the 
most  effective  service. 

Co-operation  is  rapidly  becoming  one  of  the  great  in- 

»  "Exactly,  the  same  qualities  of  public-spirited  energy,  capacity 
for  compromise,  dogged  persistence  and  self-subordination,  together 
with  shrewd  intelligence  in  choice  of  officials,  watchfulness  and  gen- 
erosity towards  servants — precisely  the  same  intellectual  and  moral 
gifts  are  needed  in  the  members  of  the  successful  store  as  in  the  citizens 
of  a  well  ordered  and  enterprising  municipaUty." — Beatrice  Potter: 
Co-operative  Movement,  189. 

"Let  me  repeat  it,  co-operation  is  a  political  training  school  quite 
as  much  as  it  is  a  training  school  in  more  decent  business  methods." — 
John  Graham  Brooks:  Next  Steps  in  Political  Reform. 

One  English  society  has  an  estate  on  which  are  three  streets,  all 
the  residents  of  which  are  members.  At  a  municipal  election  it  was 
found  that  every  voter  except  two  on  all  these  streets  had  voted — a 
record  unknown  in  other  parts  of  the  town. 

2  The  Co-operative  Movement — Great  Britain,  page  72. 


134         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

temational  forces.  Almost  alone  it  has  retained  its  inter- 
national spirit  during  the  great  world  war.  When  the  Ger- 
The  Inter-  mans  invaded  France  they  spared  co-operative 
spiTi°t°^  Co-  stores  and  addressed  French  co-operators  as 
operation  "brothers."  The  great  English  co-operativc  Or- 
ganization has  begun  laying  plans  in  the  midst  of  the  war 
to  assist  the  embattled  co-operators  of  Austria-Hungary 
as  soon  as  the  conflict  ceases.  At  recent  meetings  of  co- 
operative alliances  of  the  allied  countries  in  Paris  and  of 
the  central  powers  in  Berlin,  vacant  chairs  were  placed  for 
the  absent  co-operators  of  the  enemy  countries. 

Success  in  co-operative  supply  is  based  upon  a  fraternal 
spirit  which  seeks  to  bring  about  justice  and  fellowship 
and  the  elimination  of  antagonism  including  the  warfare 
of  competition,  and  the  promotion  of  brotherly  love. 
Moreover,  it  comes  with  a  valid  voucher  for  this  spirit 
and  these  aims,  since  without  them  it  cannot  survive. 

The  effect  upon  the  outlook  and  character  of  those  who 
become  ardent  co-operators  is  marked.  One  has  a  new 
Co-operation  ^ision  of  life  who  sccs  it  co-operatively.  The 
gives  social  succcss  of  One  means  then  the  success  of  all. 
No  one  profits  by  another's  loss.  It  brings  the 
social  outlook  and  the  social  vision  and  stimulates  the 
desire  to  work  for  others.  The  forces  of  co-operation  have 
proved  to  be  recruiting  stations  for  the  armies  of  social 
service.  It  teaches  the  need  of  fellowship  and  of  unity, 
and  the  necessary  individual  restraints  without  which 
there  can  be  no  unity,  such  as  self-control  and  toleration, 
courtesy  and  trust,  self-respect  and  mutual  respect.  It 
shows  the  need  of  prudence  and  forethought  and  it  makes 
dependent  men  independent  and  reliant.  It  gives  the  habit 
of  self-direction  by  imposing  responsibilities  and  teaches 
self-government.  And,  what  is  not  unimportant  to-day, 
it  teaches  people  to  do  things  for  themselves  without  look- 
ing to  the  city  or  the  state.  It  gives  us  individuals  trained 
to  see  their  duties  to  themselves  and  to  their  fellows  and 
shifts  the  emphasis  from  the  selfish  to  the  altruistic,  from 
the  materialistic  to  the  finer  things  of  the  spirit. 


HIGHER   GAINS  AND  HUMAN  VALUES  135 

The  uniqueness  and  the  promise  of  distributive  co-opera- 
tion lies  in  the  fact  that  it  seizes  on  the  value  of  the  neg- 
lected factor  in  economic  organization — the  consumer. 
There  are  many  capitahsts,  countless  laborers,  vast  armies 
of  producers,  agricultural  and  industrial,  but  not  one  of 
these  groups  includes  everybody.  But  every  human  being 
is  a  consumer.  Our  various  social  systems  organize  society 
in  the  interest  of  one  or  the  other  of  these  groups  and  will 
succeed  or  fail  in  the  measure  in  which  they  serve  all;  and 
not  one  of  them  all,  save  distributive  co-operation,  even 
assumes  to  include  every  member  of  society.  Our  present 
system  of  capitalism  organizes  the  capitalists  in  mighty 
combinations  and  administers  society  with  capital  as  its 
central  feature.  Labor  unionism  organizes  the  laborers 
and  has  unfortunately  permitted  itself  to  represent  only  a 
part  of  labor,  the  aristocracy  of  labor,  the  skilled,  and  only 
in  part  the  unskilled  laborers,  the  white  but  not  black 
laborers.  It  is  being  demonstrated  again  and  again  that 
what  labor,  organized  as  producers,  gain  in  their  great 
conflict  with  capital  they  lose  in  great  part  through  being 
unorganized  as  consumers.  The  great  coal  strike  was 
won  by  labor  as  producers.  But  the  price  of  coal  was  im- 
mediately raised  to  make  up  for  the  higher  wages.  As  coal 
enters  into  the  production  of  practically  everything,  manu- 
facturers in  every  line  were  forced  to  raise  their  prices. 
The  coal  miners  lost  as  consumers,  by  higher  prices,  much 
that  they  had  gained  as  producers  by  higher  wages.  The 
Lawrence  strike  won  a  ten  to  fifteen  per  cent  raise  in  wages. 
The  price  of  cotton  goods  rose  fifteen  to  twenty  per  cent. 
This  came  out  of  consumers,  and  labor  tends  to  lose  as 
consumers  no  small  part  of  what  they  gain  as  producers. 
Labor  unionism  protects  only  the  dollar  the  working  man 
earns.  He  must  learn  to  protect  the  dollar  he  spends  and 
that  means  consumers'  co-operation. 

Various  plans  for  preventing  the  centralization  of  wealth 
which  appear  to  have  an  increasing  appeal,  such  as  in- 
heritance taxes,  graduated  income  taxes,  and  profit-sharing, 
even   stock-sharing,   are  but   modifications   of  capitalism 


136         CO-OPERATION  THE   HOPE   OF   THE   CONSUMER 

and  leave  the  capitalist,  with  slightly  abbreviated  powers, 
the  captain  of  industry.  That  the  present  capitalistic 
Taxes  on  order  which  is  responsible  for  the  awful  in- 
weaith  and  equalities  of  life  cannot  continue  to  satisfy  an 
o^y  modTfie^d  awakening  world  is  the  conviction  of  most 
capitalism       students  of  the  social  problem. 

The  great  programs  of  sociaHsm,  syndicalism,  and  the 
single  tax  can  probably  be  rightly  characterized  as  re- 
Sociaiism,  organizations  of  society  about  men  as  producers, 
and  the  single  the  first  two  emphasizing  the  common  owner- 
tax    organize  gj^^jp  Qf  ^]^g  tools  and  machines  of  industry  and 

men    as    pro-    .    '^ .  ,  1  •         /•     1  •    •      1 

ducers  the  last  the  common  ownership  of  the  origmal 

source  of  all  products,  the  land.  These  systems  promise 
that  automatically  the  consumer  as  a  member  of  a  society 
reorganized  in  justice  will  receive  full  equity.  There  is 
no  thought  here  of  discussing  the  validity  of  those  claims 
save  to  point  out  that  they  found  their  new  common- 
wealths upon  the  producer  and  the  producer  represents 
but  a  part  of  society,  or  upon  the  citizen,  and  the  citizen 
a  political  factor  which  may  or  may  not  function  aright. 
One  thing  should  be  pointed  out,  and  that  is  that  almost 
all  that  socialism  aims  to  accomplish  by  coercive  and  in- 
voluntary collectivism,  co-operation  can  probably  assure 
by  voluntary  collectivisim. 

Consumers'  co-operation  declines  to  recognize  the  su- 
premacy of  the  capitaHst,  sees  a  more  promising  figure 
Helplessness  than  the  producer,  and  builds  its  system  upon 
2Lw»*H  ^n^l'  the   consumer.     It   is   therefore   a   drama   of 

ganizea     con- 
sumer Everyman  and  not  of  any  class.     As  things 

stand  now  the  producers  are  powerfully  organized, — the 
capitalists  in  great  corporations  which  tend  rapidly  towards 
monopolies,  and  the  laborers  into  unions  powerful  enough 
to  make  our  government  plead  for  a  truce,  and  the  farmers 
less  effectively  but  with  increasing  power.  Combination 
and  organization  dominate  this  field.  The  field  of  distribu- 
tion is  being  rapidly  organized  in  every  direction  by  great 
combinations  of  capital.  The  chain  stores  and  the  mail 
order  houses  are  likely  in  time  to  make  the  merchant  with 


HIGHER   GAINS  AND  HUMAN  VALUES  137 

one  store  as  obsolete  as  the  stage  coach.  The  old  Hne  re- 
tailer is  doomed.  The  one  field  that,  here  in  America,  is 
still  unorganized  is  that  of  the  consumers.  The  unorganized 
consumer  is  as  well  qualified  to  treat  with  the  organized 
forces  of  prockiction  and  distribution  as  a  Belgian  peasant 
is  to  deal  with  the  German  army.  He  has  no  friend  at 
court.  He  is  as  helpless  and  unprotected  as  a  fledgling 
bird  in  a  feline  world.  The  producer  awakened  first  to 
the  absolute  necessity  of  combination  in  the  modern  world. 
The  distributer  is  awakening.  The  consumer  too  must 
read  the  old  warning  "Unite  or  die."  United  the  con- 
sumers are  the  mightiest  power  of  them  all.  Unorganized, 
they  are  travelling  the  road  to  Jericho,  and  the  only  one 
of  the  old  personalities  missing  on  that  road  to-day  is  the 
Good  Samaritan. 

Co-operation  has  made  experiments  along  both  lines  of 
organization  and  we  have  both  producers'   co-operation 
and  consumers'  co-operation,  and  their  recon-  consumers' 
ciliation  lies  in  the  future.     The  one  has  or-  ^°"j°p^^*J^^°^ 
ganized  labor  first  and  sought  the  consumer  ducers'   co- 
afterwards,  but   consumers'   co-operation  sue-  operaUon 
ceeds  by  organizing  and  rewarding  the  consumer  and  after- 
wards employing  labor  in  production.     It  hires  labor  and 
it  hires  capital  and  the  reconciliation  of  capital  and  labor 
lies  in  their  common  service  to  the  great  commonwealth 
of  consumers. 

It  necessitates  no  revolution.  It  disturbs  no  authority 
of  proprietorship,  confiscates  no  man's  property,  and 
equalizes  the  future  without  spoliation.  The  ff^  social  rev- 
strained    relations    of    capital    and    labor    are  oiution  nor  vi- 

oicncc  1166GCO 

almost  automatically  adjusted.  It  changes  to  adopt  co- 
the  attitude  of  the  workingman  towards  capi-  operation 
tal.  Where  once  he  regarded  it  as  an  instrument  of  op- 
pression, he  comes  to  see  it  as  an  agent  of  progress.  "Co- 
operators  are  not  haters  of  capital.  They  are  creators 
of  capital.  It  may  be  a  good  thing,  and  often  has  been, 
when  capital  hires  labor;  it  is  better  when  labor  hires 
capital;  pays  it  according  to  its  risk;  pays  it  fairly,  pays 


138         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

it  even  generously,  but  pays  it  only  once — taking  care  that 
it  does  not  come  back  a  second  time  filching  the  dividend 
of  labor,  and  filling  the  heart  of  industry  with  suspicion 
and  despair."  ^  It  is  a  steady  influence  for  social  peace, 
against  strikes  and  low  wages,  and  long  hours.  It  unites 
capital  and  labor.  It  unifies  the  interests  of  the  dealer 
and  the  consumer.  It  makes  one  the  toilers  and  the  in- 
tellectuals. The  ways  before  us  are  our  present  bankrupt 
individualism,  voluntary  collectivism  and  involuntary 
collectivism  or  competition,  co-operation  and  socialism. 
We  can  pass  into  a  new  order  without  destruction  and  con- 
flict if  we  choose  the  fork  of  the  road  that  leads  to  volun- 
tary association  and  co-operation.^ 

Co-operation  is  the  next  step  in  the  world  sweep  of  democ- 
racy. We  cannot  long  continue  to  be  satisfied  to  exalt 
democracy  in  the  political  realm  and  ignore  it  in  the  indus- 
trial world.  Capitalism  means  autocracy  prevails  in  in- 
dustry. Here  and  there  it  is  a  benevolent  despotism,  but 
the  rank  and  file  have  no  voice.  Some  of  the  suggested  rem- 
edies but  carry  us  from  absolutism  to  limited  monarchies,  or 
at  best  to  oligarchies,  plutocracies  and  aristocracies.  The 
many  would  still  be  in  the  hands  of  the  few.    Co-operation 

'^Co-operation,  June,  1914,  page  172. 

'"Co-operation  supplements  political  economy  by  organizing  the 
distribution  of  wealth.  It  touches  no  man's  fortune;  it  seeks  no  plun- 
der; it  causes  no  disturbance  in  society;  it  gives  no  trouble  to  states- 
men; it  enters  into  no  secret  associations;  it  contemplates  no  violence; 
it  subverts  no  order;  it  envies  no  dignity;  it  asks  no  favors;  it  keeps  no 
terms  with  the  idle  and  it  will  break  no  faith  with  the  industrious;  it 
means  self-help,  self-dependence,  and  such  shares  of  the  common 
competence  as  labor  shall  earn  or  thought  can  win,  and  this  it  intends 
to  have." — G.  J.  Holyoake. 

"If  co-operation  is  successful,  it  will  work  a  beneficial  social  and 
economic  revolution  of  the  widest  scope — a  revolution,  moreover, 
so  conducted  as  to  leave  no  heritage  of  bitterness  behind." — Bishop 
Lightfoot. 

"I  have  no  hesitation  in  saying  that  I  believe  the  life  of  both  in- 
dustrial peace  and  industrial  efficiency  lies  in  the  successful  applica- 
tion of  co-operative  principles  to  business  enterprise." — Earl  Grey. 


HIGHER   GAINS  AND  HUMAN  VALUES  139 

means  business  and  industry,  trade  and  commerce  of  the 
people  by  the  people  and  for  the  people.  It  is  the  most 
democratic  thing  in  the  world— thoroughly  and  truly  dem- 
ocratic— and  one  hundred  thousand  co-operative  societies 
have  proved  democracy  possible  in  the  economic  field.  ^ 

This  new  aspirant  for  the  economic  throne  comes  to  us 
tried  and  tested  by  three-quarters  of  a  century  of  wide  and 
varied  experience  in  differing  conditions,  in  Summary 
many  lands.  Its  claims  are  substantiated  by  the  facts  of 
its  history.  It  offers  to  human  society  a  transmutation  of 
its  economic  motives  and  methods  from  the  sordid  and 
selfish  and  sharp  and  combative  to  the  uplifting,  the  service- 
able, the  frank  and  the  mutual.- 

To  the  consu?ner  it  gives  a  freedom  from  solicitation  and 
over-persuasion,  from  debasement  and  adulteration  of 
goods,  from  distrust  and  constant  defence.  It  encourages 
his  thrift  and  adds  materially  to  his  purchasing  power, 
enabling  him  through  that  increase  of  power  to  improve  his 
opportunities  and  his  standards  of  living,  and  also  making 
him  potent  to  improve  conditions  in  the  economic  world 
and  contribute  to  the  well-being  of  others.  It  lifts  him 
above  the  necessity  for  complete  engrossment  in  material 
things.  To  the  producer  it  assures  fairer  prices  for  his  goods 
and  buyers  with  larger  purchasing  power.  For  the  store 
workers  it  raises  the  moral  standards  of  their  trade  and 
makes  it  a  public  service  freed  from  the  temptations  in- 

1  "Democracy  means  co-operation.  It  means  people  trusting  them- 
selves, believing  in  themselves,  organizing  for  their  own  benefit,  get- 
ting for  themselves  all  the  profit  of  concentration  and  efficiency. 

"It  means  for  every  man  to  have  a  share  in  the  capitalization  of  his 
country  and  the  profits  of  its  business,  as  well  as  for  him  to  have  a  vote 
in  its  government."— Dr.  Frank  Crane. 

^  "It  is  the  unique,  and  I  s:iy  advisedly,  the  glorious  achievement  of 
the  democratic  form  of  co-operation,  that  through  cxtingiiishing  profit 
as  well  as  eliminating  the  profit  maker,  it  destroys  the  occasion — it 
roots  up  and  extirpates  the  very  foundations — of  the  art  of  wealth- 
gaining  apart  from  rendering  services  to  the  community."  — Beatrice 
Potter:  The  Co-operative  Movement  in  Great  Britain,  page  206. 


I40         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

cident  to  private  gain.  Society  as  a  whole  gains  by  having 
its  wealth  decentralized,  by  the  utilization  of  what  now 
goes  to  waste  in  glutted  markets,  by  the  elimination  of 
needlessly  multiplied  stores,  the  liberation  of  their  owners 
and  employees  for  much-needed  production,  and  by  the 
training  in  citizenship  and  business  responsibility  of  thou- 
sands who  under  our  present  competitive  individualistic 
system  are  never  trained  or  used  to  serve  in  the  broader 
fields.  Woman  is  accorded  a  full  equality  and  can  use  her 
special  knowledge  and  experience  to  greatest  advantage. 
The  trust  is  effectively  curbed.  International  good  will  is 
promoted  and  international  ties  increased.  By  taking  the 
consumer  as  the  center  of  its  organization  it  includes  every 
living  soul.  The  great  and  needed  readjustments  in  society 
are  brought  about  peacefully.  Democracy  moves  on  in  co- 
operation to  the  next  stage  of  its  world  conquest.  Profit 
yields  to  service,  division  to  fraternity,  strife  to  concord 
and,  best  of  all,  under  this  beneficent  order  we  work  not 
for  our  fellowmen  but  with  them. 


PART  III 
PRACTICAL  CO-OPERATION 


CHAPTER  XI 
AWAKENING  THE  CONSUMER 

"The  greatest  thing  a  human  soul  ever  does  in  this  world  is  to  see 
some  thing  and  tell  what  it  saw  in  a  plain  way." — Ruskin. 

"Co-operation  is  the  new  thought.  It  requires  that  the  ideal  shall 
be  dominated  by  interest  in  common  welfare.  This  leaven  is  working 
throughout  the  whole  land  to-day.  The  time  is  not  so  far  away  when 
it  will  hold  a  big  place  as  a  work-a-day  thought  in  the  mind  of  every 
man." — Ray  P.  Brubaker. 

"Co-operation  is  essentially  a  democratic  movement  and  its  ul- 
timate success  depends  upon  the  membership  as  a  whole — their 
knowledge  of  its  principles,  their  devotion  to  its  cause.  Apathy  is  the 
greatest  foe  to  success." — Catherine  Webb:  "Industrial  Co- 
operation." 

In  Part  I  of  this  book  was  pointed  out  what  seemed  to  the 
writer  to  be  the  shortcomings  and  evils  of  the  present  dis- 
tributive system.  In  Part  II  it  is  claimed  that  the  remedy 
could  be  found  through  the  Rochdale  organization  of  con- 
sumers. Some  of  the  far-reaching  advantages  of  co- 
operation among  consumers  were  indicated.  We  now  dis- 
cuss some  of  the  methods  and  conditions  of  the  successful 
working  together  of  groups  and  the  details  of  store  opera- 
tion. 

Earl  Barnes  says  that  one  of  the  greatest  needs  of  our 
time  is  social  inventions.  Perhaps  as  great  a  need,  however, 
is  to  get  a  good  thing  introduced  after  it  is  invented.  A 
superior  machine,  one  showing  larger  output  and  lower  cost 
of  operation,  can  be  introduced  without  much  trouble, 
for  it  can  be  quickly  and  definitely  tested.  Not  so  with 
social  inventions  in  a  democracy. 

That  consumers  can  derive  very  important  advantages 
from  co-operative  bu>'ing,  can  secure  far  better  real  service 


144         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

at  materially  less  cost  and,  at  the  same  time,  as  by-products 
of  the  system,  exert  very  beneficent  ethical,  social  and  eco- 
stabiiity  of  ^lomic  influences,  has  been  so  absolutely  proven 
the  co-oper-  by  experience  that  there  need  remain  no  doubt 
ative  idea  -^^  ^^^  mind  of  anyone  who  will  inquire,  "The 
co-operative  plan,"  says  Theodore  Roosevelt,  "is  the  best 
plan  of  organization  wherever  men  have  the  right  spirit  to 
carry  it  out.  ...  It  develops  individual  responsibility  and 
has  a  moral  as  well  as  a  financial  value  over  any  other 
plan." 

But  it  has  been  equally  proven  that  successful  co-oper- 
ative buying  depends  ultimately  upon  the  consumer.  If 
Success  de-  intelligent  co-operation  is  the  chief  hope  of  the 
matdy  on^'the  consumer — the  intelligent  consumer  is  the  only 
consumers  hope  of  co-operation.  There  is  no  magic  about 
co-operation.  It  will  not  perform  the  impossible.  You  can- 
not get  and  test  results  by  going  out  to-day  and  buying  it 
and  installing  it  to-morrow  as  you  would  a  new  machine. 
Nor  can  it  be  handed  down  or  out  by  employers  or  others. 
Nor  even  can  it  be  brought  about  by  devoted  directors  or 
management.  Co-operation  rests  with  consumers.  Co- 
operating is  acting  together,  and  to  do  any  particular  thing 
co-operatively,  enough  people  must  act  together  to  do  the 
thing  in  hand.  The  conditions  of  success  are  simply  deciding 
what  to  do  and  then  all  standing  by  until  it  is  done.  If 
only  half  stand  by,  the  thing  will  wholly  fail.  There  are 
hundreds  of  reasons  given  for  the  failure  of  co-operative 
stores,  but  they  practically  all  simmer  down  to  a  lack  of 
intelligent  perseverance.  Of  the  many  doors  to  disaster, 
disloyalty  is  the  key  which  unlocks  them  all. 

This  being  true,  the  great  question,  the  question  bigger 
than  all  the  rest,  is  how  to  get  the  people  to  see  and  under- 
importance  Stand  the  failure  of  the  present  distributive  sys- 
of  educa-  tem,  to  appreciate  what  can  be  done  co-oper- 
tionai  work  ^tively,  and  to  know  the  simple  but  exacting 
conditions  of  successful  collective  action. 

So  education  is  at  the  bottom  of  the  whole  business.  Not 
until  consumers  adequately  grasp  and  appreciate  the  ad- 


AWAKENING   THE   CONSUMER  I45 

vantages  of  co-operation  will  they  go  into  it  whole-heartedly 
and  to  stay. 

In  the  first  place,  co-operation  is  a  doctrine  and  a  real 
co-operative  society  is  composed  of  believers  in  that  doc- 
trine. To  be  a  co-operator  one  must  have  co-operation 
espoused  the  belief  that  the  co-operative  prin-  *  "®®^ 
ciple  and  plan  is  calculated  to  bring  about  such  advantages, 
tangible  and  intangible,  to  the  individual  and  society,  that 
it  should  be  organized  and  developed.  His  conviction  must 
be  so  strong  and  his  faith  in  the  outcome  so  abiding  that 
he  is  willing  to  commit  himself  seriously  to  the  program. 
It  has  usually  been  assumed,  in  organizing  a  store  company, 
that  whoever  would,  on  the  spur  of  the  moment,  buy  a 
share  of  stock,  could  be  counted  upon.  The  result  has  been 
a  group  which  was  a  rope  of  sand,  an  unstable  society  un- 
prepared to  meet  the  obstacles  which  arise  in  most  important 
undertakings.  A  man  or  woman  who  has  grasped  the  full 
significance  of  co-operative  buying  will  come  to  have  a  new 
belief  and  a  new  and  different  way  of  thinking,  a  different 
order  of  life.  Bu>dng  will  have  a  different  meaning.  The 
leaven  and  the  salt  of  a  society  must  be  of  this  kind  of  co- 
operators.  Of  course  not  all  will  take  it  so  seriously,  the 
many  usually  leave  the  initiative  to  the  few.  But  this  kind 
of  sentiment  needs  to  saturate  a  society  through  and 
through. 

The  great  mistake  that  has  been  made  in  starting  Amer- 
ican co-operative  stores  has  been  in  assuming  that  once 
started  a  store  would  so  strikingly  demonstrate  -^^  g^^j^y  ^^_ 
the  advantages  of  the  system  as  to  hold  all  mediate  re- 
charter  members  and  rapidly  attract  new  *""^^ 
followers.  This  rarely  if  ever  happens.  So  seldom  does  it 
occur  that  it  is  never  wise  to  start  with  a  group  not  pre- 
pared to  meet  obstacles.  In  the  first  place,  so  radical  a 
change  as  is  involved  in  the  conduct  of  a  store  by  con- 
sumers, introduces  new  problems  and  requires  adjust- 
ments which  do  not  make  for  immediate  di\idends.  It  is 
easy  to  waste  in  co-operative  mistakes  all  that  is  saved  by 
cutting  out  the  wastes  and  profit  of  the  independent  dealer. 


146         CO-OPERATION  THE   HOPE   OF  THE  CONSUMER 

These  mistakes  can  only  be  avoided  through  education 
of  the  membership,  the  directors  and  the  management, 
and  this  takes  time. 

Then,  if  small  advantages  are  shown  at  the  start,  they 
are  not  conspicuous  enough  to  satisfy  those  with  large 
expectations  nor  those  with  small  grievances.  The  gains 
from  co-operation  do  not  mainly  come  from  absorbing 
what  would  go  to  merchants  in  net  profits,  but  by  working 
out  other  economies  which  co-operative  management 
make  possible. 

The  Rochdale  pioneers  saw  the  need  of  education  along 
co-operative  lines  and  at  the  very  outset  provided  a  fund 
British  be-  to  carry  it  on.  In  England  this  has  always 
lief  in  the  im-  ^^^^  considered  one  of  the  necessary  prereq- 

portance    or  ,  ^  j 

education  uisites  of  success.  Not  nearer,  as  cause  and 
effect,  are  "the  little  red  schoolhouse"  and  American 
democracy,  than  are  education  and  successful  co-operation 
in  this  country  as  well. 

There  is  no  short  road  to  any  large  achievement.  A 
co-operative  store  may  be  started  in  such  a  way  and  under 
such  conditions  that  it  gives  gratifying  results  to  members 
at  the  outset.  But  that  does  not  necessarily  prove  any- 
thing except  that  that  group  happened  to  be  fortunate  at 
the  moment.  On  the  other  hand,  a  store  may  be  started 
which  shows  losses  at  the  outset  and  perhaps  continued 
losses.  Neither  does  that  necessarily  prove  anything 
about  the  co-operative  plan. 

Since  co-operation  is  working  together  and  successful 
co-operation  is  successful  working  together,  a  co-operative 
store  which  is  successful  is  one  in  which  the  members  and 
the  store  workers  pull  together  so  perfectly  that  the  results 
are  the  best  that  can  be  had  under  the  circumstances; 
circumstances  being  beyond  control  of  the  group.  ^  This 
kind  of  work  cannot  be  had  without  vision,  social-minded- 
ideai  advan-  ^^^S'  fraternal  spirit  and  persevering  loyalty, 
tages  to  be  The  nature  of  co-operation  seems  to  be  such 
sought  first  ^j^^^  j^g  -jg^j  advantages  must  first  be  sought, 
when  its  pecuniary  advantages  will  come  as  an  incident, 


AWAKENING  THE   CONSUMER  147 

or,  in  the  language  of  Francis  G.  Peabody,  "A  final  condi- 
tion of  success  in  co-operation  is  even  more  fundamental. 
It  is  a  supply  of  what  the  advocates  of  the  movement  call 
'co-operative  men.'  The  scheme  depends  not  merely  on 
economic  thrift  but  on  integrity,  fidelity  and  disinterested- 
ness. .  .  .  Co-operation  presupposes  common  sense,  for- 
bearance and  co-operative  spirit.  .  .  .  Without  them  it 
fails  as  business  and  with  them  its  successes  are  something 
more  than  business  successes." 

So  dependent  is  the  success  of  a  store  society  upon  the 
attitude  of  the  members  toward  the  co-operative  idea  that 
the  work  of  the  educational  committee  becomes  ^^^  educa- 
very  important.     Too  much  care  cannot  be  tionai  com- 
exercised  in  the  selection  of  members  of  the  ™'"^® 
committee.    While  it  is  well  to  have  one  or  more  members 
also  on  the  board  of  directors  so  that  the  work  of  the  com- 
mittee may  be  well  known  to  the  board,  the  best  people 
for  the  work  should  be  enlisted. 

Education  and  propaganda  work  should  not  be  treated 
as  a  luxury,  but  as  necessary  to  success.  Ample  funds 
should  be  devoted  to  it. 

There  are  two  kinds  of  publicity  work  which  are  essential 
to  the  proper  conduct  of  a  co-operative  store.  Co-operative 
advertising  of  goods  and  the  store  as  an  efficient  distribut- 
ing agency  will  generally  be  looked  after  by  the  store 
management.  The  business  of  the  educational  committee 
is  to  make  converts  to  the  co-operative  idea,  to  confirm 
and  more  fully  establish  present  believers,  and  to  renew 
and  strengthen  the  faith  of  those  who  may  become  luke- 
warm. 

The  practical  necessity  for  educational  work  lies  in  the 
fact  that  the  real  believer  in  co-operation  and  practical  ne- 
in  the  store  is  an  important  asset  to  the  business  cessity    of 
by  reason  of  his  trade  and  his  influence.  propaganda 

The  profit  dealer  must  more  or  less  advertise  and  praise 
each  article  he  sells,  and  this  is  ex'pensive.  When  a  con- 
sumer once  reaches  the  conviction  that  co-operative  buy- 
ing is    the   true   and  wise  way   to   economy,  when   the 


148         CO-OPERATION  THE   HOPE   OF  THE  CONSUMER 

store  has  been  "sold"  to  the  consumer,  the  neces- 
sity for  this  expensive  pushing  of  separate  articles  is 
avoided. 

The  committee  should  make  a  definite  program  to  cover 
a  month,  three  months  or  a  year,  deciding  upon  the  line 
A  definite  °^  argument  and  the  media.  Certain  ideas 
program  de-  ought  to  be  stressed  in  certain  ways.  This 
sirab  e  ^^^^   should   includc   talks   to   employees,    or 

classes  to  cover  certain  ground,  lectures  or  home  talks  at 
fijced  intervals,  and  the  distribution  of  certain  tracts.^  In 
many  cases  social  or  entertaiimient  meetings  should  be  held. 
Printing  should  be  done  according  to  fixed  plans,  and  word 
of  mouth  work  systematized.  This  program  should  be 
faithfully  carried  out;  it  is  dangerous  to  allow  the  work  to 
drift. 

The  fundamental  planks  should  be  kept  constantly  to 
the  front.  The  present  system  of  merchandizing  is  radically 
wrong;  co-operation  is  the  thoroughgoing  remedy,  but  co- 
operation can  only  be  worked  out  by  enthusiastic,  intelli- 
gent and  persevering  endeavor  on  the  part  of  the  whole 
group. 

The  great  advantages  of  well  established  co-operation 
richly  justify  the  effort,  bringing  help  not  only  to  those  who 
participate  in  the  work  but  putting  the  benefits  within 
reach  of  others  who  may  greatly  need  them,  and  bringing 
well-being  to  all  who  touch  the  undertaking. 

The  educational  committee  has  to  do  with  the  ideal  aims 
of  co-operation.  One  of  its  hardest  handicaps  will  be  the 
fact  that  the  store  fails  in  many  ways  to  exemplify  co- 
operative principles.  About  this  there  are  two  things  to 
do:  first,  to  bring  the  store  in  hne  so  far  as  possible;  and, 
second,  to  urge  that  the  store  is  earnestly  working  toward 
these  ideals.  It  should  be  the  privilege  of  all  as  it  is  the 
duty  of  all  to  help  reach  the  goal.  Too  much  prominence 
cannot  be  given  to  the  fact  that  co-operative  results  are 

^  These  can  be  obtained  from  the  Co-operative  League  of  America, 
2  West  13th  St.,  New  York  City,  or  from  the  Co-operative  Union  of 
Manchester,  England. 


AWAKENING  THE   CONSUMER  1 49 

an  achievement  of  great  importance  and  cannot  be  had  at 
once  by  short  cuts. 

There  are  many  things  to  learn  about  various  phases  of 
co-operation,  but  the  most  important  of  all  is  cultivation 
of  the  right  spirit.     It  is  not  easy  in  practice  Learning  to 
for  the  member,  long  accustomed  to  the  old  "  think  co-^ 
system,  to  learn  to  habitually  think  and  feel  ^p^''*^^^  ^ 
co-operatively.    The  store  "of  the  people,  by  the  people 
and  for  the  people"  in  which  the  sentiment  is  "each  for 
all,  and  all  for  each"  is  a  new  thing.     It  is  new  to  buy 
through  an  agency  which  practically  guarantees  quality 
and  cost.     For  the  consumer  to  know  that  a  store  is  run 
solely  in  his  interest,  and  is  supervised  by  his  chosen  repre- 
sentative is  new.    To  help  adjust  the  mind  of  members  to 
these  new  conditions  is  an  important  part  of  the  task  of 
education. 

But  it  will  be  good  news  to  many  socially-minded  people 
to  learn  that  through  buying,  which  has  hitherto  been 
regarded  as  an  act  of  no  social  significance,  Co-operative 
one  can  make  a  positive  contribution  toward  automatic^  so- 
the  general  welfare.  Buying  co-operatively  is  ciai  welfare 
helping  to  build  an  institution  beneficial  to  all  concerned, 
and  looking  toward  healthy  social  reconstruction,  and 
this  done  at  no  sacrifice  but  with  net  pecuniary  saving  to 
the  contributor.  He  helps  others  by  helping  himself. 
This  privilege  of  putting  new  meaning  into  a  hitherto  de- 
pressing department  of  life  will,  when  it  is  understood,  be 
appreciated  by  thousands.  To  promote  this  attitude 
toward  co-operation  the  fact  should  be  kept  prominent 
that  there  is  no  commercial  or  self-seeking  motive  about  a 
co-operative  store.  The  aim  of  a  group  of  co-operators  is 
to  serve  themselves  and  thereby  create  an  agency  whose 
privileges  are  open  alike  to  all,  and  whose  influence  for 
justice,  equity,  mutuality  and  integrity  will  touch  and 
benefit  all  who  come  in  contact  with  it.  The  consunier 
who  has  an  intelligent  grasp  and  therefore  an  enduring 
friendship  for  co-operation  will  not  find  loyalty  to  the 
enterprise  difiicult,  for  he  will  see  through  the  apparent  or 


150         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

temporary  attractions  offered  by  profit  stores.  His  enlist- 
ment for  co-operation  will  be  based  not  upon  any  super- 
ficial grounds,  but  upon  the  fundamental  defects  of  profit 
merchandizing  and  the  efficiency,  equity  and  beneficence 
of  the  developed  co-operative  system.  His  loyalty  to  the 
co-operative  principles  and  movement  will  be  like  loyalty 
to  his  friends,  or  to  his  conscience.  Co-operative  stores 
are  made  by  people  who  have  a  real  sense  of  responsibility 
and  are  not  in  the  habit  of  chasing  privileges  for  which 
they  assume  no  corresponding  sense  of  obligation. 

He  realizes  the  defects  of  the  profit  system  and  sees  that 
these  defects  are  fundamental  and  inherent  and  not  merely 
The  co-oper-  abuses  of  a  system  naturally  good.  It  is  not 
ator  must:      enough   for  him   to   be   dissatisfied   with   the 

See  the  cause    ,      1  .       i  .  .,  >-,  ,.         , 

and  believe  dealers  m  his  community.  Co-operation  has 
in  the  cure  j^q  quarrel  with  the  individual  dealer;  its  war 
is  with  the  system  behind  the  dealer,  a  system  which  is 
inherently  unfitted  to  serve  the  best  interests  of  the  con- 
sumer and  society. 

He  sees  that  the  co-operative  plan  is  based  upon  sound 
principles  and  is  definite  and  dependable;  that  properly 
carried  out,  co-operation  can  be  relied  upon  to  bring  the 
desired  results. 

Another  thing  he  realizes  is,  as  we  have  said,  that  co- 
operation has  no  magic  power  to  bring  spectacular  results 
overnight,  but  that  it  must  be  carefully  and  thoroughly 
applied  in  the  right  way  and  under  proper  conditions. 
Co-operative  buying  has  definite  ends  in  view,  ends  of 
great  value,  but  these  can  be  attained  only  by  applying 
both  co-operative  principles  and  business  principles.  Dem- 
ocratic distribution  is  a  great  undertaking  and  its  rich 
and  far-reaching  fruits  are  well  worth  working  for.  It 
often  takes  time  and  perseverance  to  get  results. 

When  a  person  clearly  sees  these  three  things,  he  will 
so  have  glimpsed  the  important  and  far-reaching  advan- 
tages of  the  new  system  as  to  deem  it  a  privilege  to  partici- 
pate in  bringing  them  about.  In  view  of  the  large  ends  in 
prospect  he  will  regard  as  trifling  any  temporary  imperfec- 


AWAKENING  THE   CONSUMER  15I 

tions  of  operation.  Indeed,  he  will  see  in  these  very  shorts 
comings  opportunity  for  his  helpfulness  in_  making  con- 
structive and  kindly  suggestions.  He  will,  Loyalty  to  the 
however,  have  his  trials,  one  of  the  hardest  of  ^.^J°'i^*y'|tern 
which  will  be  to  remain  an  enthusiastic  friend  proof  of  de- 
of  the  cause  when  he  is  in  the  minority  and  is  ^ocracy 
confident  that  he  is  right.  Herein  co-operation  affords 
splendid  training  in  democracy.  It  is  easy  and  natural 
when  one  is  voted  down  to  quit  or  sulk.  But  such  a  course 
is  cheap  and  small.  Co-operation  is  organized  friendship. 
Another  reason  for  educating  members  is  to  give  them 
such  an  insight  into  the  beneficent  results  and  influences 
as  to  give  the  individual  members  real  satisfaction  in  par- 
ticipating in  the  development  of  the  plan. 

It  is  desirable  to  keep  members  as  intimately  in  touch 
as  possible  with  what  the  store  is  doing.    A  co-operative 
store  has  no  secrets  from  its  members.     In  Frankness 
fact,  one  of  the  first  conditions  of  success  in  and    heipfui- 
co-operation  is  mutual  kindly  frankness.    Mem- 
bers should  be  told  all  about  what  the  store  is  doing  before 
they  ask.     Members  should  be  told  how  they  can  serve 
the  store,  and  thus  serve  themselves.    If  useless  things  are 
done  and  expense  incurred  in  priwite  stores,  these  can  be 
successfully  eliminated  in  the  co-operative  only  with  tlie 
intelligent  co-operation  of  the  membership.    For  instance, 
the  store  with  which  I  was  connected  found  one  fall  that 
the  trade  was  so  congested  on  Saturdays  as  to  cause  hard- 
ship to  the  help,  and  make  satisfactory  service  difficult. 
A  circular  sent  to  members  by  the  secretary  telling  the  dif- 
ficulty and   asking   that  more  orders  be  placed   Friday 
brought  immediate  response  so  that  the  trade  was  fairly 
evenly  distributed  between  Friday  and  Saturday.     This 
is  real  co-operation— the  frictionless  working  together  of 
management  and  members.     The  more  perfect  this  rela- 
tion becomes,  the  more  fully  does  each  member  become 
an  influential  missionary  to  attract  others  into  the  move- 
ment. 

There  is  a  wide  and  growing  impulse  toward  doing  for 


152         CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

others  while  doing  for  oneself.  This,  not  from  pure  al- 
truism, but  from  a  sense  of  the  solidarity  of  human  in- 
terests, the  feeling  that  the  only  way  one  can  really  help 
himself  is  by  helping  his  neighbor.  This  "enlightened 
selfishness"  which  is  far  better  than  altruism,  is  soaked 
with  a  passion  for  justice,  equity  and  the  general  welfare. 
It  is  very  easy  to  make  co-operators  of  men  and  women 
moved  by  such  impulses.  In  such  soil  the  roots  of  co- 
operation, economic,  social  and  ethical,  will  go  deep  and 
will  thrive  and  endure.  Narrow  selfishness  seeks  a  bargain 
regardless  of  whether  anyone  else  is  helped  or  hurt  by  the 
transaction.  Social-mindedness  seeks  a  saving  ever  so 
small,  provided  the  transaction  helps  to  put  the  same  sav- 
ing within  the  reach  of  the  many.  Enlightened  selfishness 
finds  its  greatest  satisfaction  in  those  benefits  which  can 
be  brought  about  for  others  at  the  same  time.  Whatever 
promotes  such  a  spirit  indirectly  promotes  co-operation. 


CHAPTER  XII 
ENLISTING  AND  DEVELOPING  STORE  WORKERS 

In  the  preceding  chapter  attention  is  called  to  the  neces- 
sity of  attaching,  as  it  were,  the  pull  of  an  interested  mem- 
bership to  make  a  co-operative  store  go.  The  "push" 
of  an  efficient  manager  and  store  staff  are  not  less  necessary. 

As  the  owner's  quest  of  profit  is  the  Ufe  of  the  private 
store,  when  this  is  removed  the  co-operative  motive  and 
spirit  in  membership,  management  and  store  workers  must 
be  substituted  or  the  store  will  die.  A  co-operative  store 
should  not  be  a  negative,  but  a  positive  and  active  thing. 
The  securing  of  the  right  kind  of  store  workers  is  therefore 
a  matter  of  prime  necessity. 

Can  the  right  kind  of  people  be  attracted  by  such  incen- 
tives as  the  co-operative  can  hold  out?  It  is  often  asked 
whether,  in  competition  with  the  private  store  Can  co-opera- 
which  offers  its  brighter  employees  various  f^^e'' righrsort 
ways  to  share  in  profits,  the  co-operative  can,  of  workers? 
with  no  pecuniary  compensations  except  fair  salar>^,  attract 
competent  people. 

In  the  first  place,  it  is  undoubtedly  true  that  the  co- 
operative store,  fully  alive  to  its  mission,  is  not  strictly  in 
competition  with  the  profit  store.  While  the  co-operative 
store  worker  uses  the  same  tools  and  goes  tlirough  much 
of  the  same  routine  as  the  private  store  worker,  his  aim 
and  spirit  are  wholly  difi"erent.  The  operation  of  a  co- 
operative store  is  a  public  trust  calling  for  wholly  unselfish 
service.  The  co-operative  worker  is  untouched  by  the 
pursuit  of  concealed  profits,  but  is  commissioned  to  serve 
his  constituents.  Work  for  the  co-operative  it  can  ofifer 
aim  and  ideal  is  a  vocation  peculiar  to  itself,  ^^  salary 
partaking  more  of  tlie  professional  character,  and  besides 


154         CO-OPEEATION   THE  HOPE   OF   THE   CONSUMER 

paying  a  fair  salary,  can  offer  other  values  which  are  likely 
to  be  appreciated  by  the  character  of  people  needed.  If 
the  pursuit  of  wealth  be  the  sole  aim  of  a  man  or  woman 
the  co-operative  cannot  hold  out  the  required  attractions. 
But,  as  Dr.  F.  G.  Peabody  says,  "A  completely  self-seeking 
man  cannot  be  a  good  co-operator."  And  it  takes  co- 
operators  to  run  a  co-operative  store  successfully. 

More  and  more  young  people  seek  through  vocations 
these  other  non-pecuniary  values.  "For  many  of  us,"  says 
Dr.  Cabot,  "for  more  every  time  the  world  takes  a  step 
in  the  right  direction,  work  that  is  service  taps  the  great 
reservoir  of  power,  sets  free  some  of  our  caged  and  leashed 
energy."  ^  Or,  to  quote  Justice  Brandeis,  "Real  success  in 
business  is  to  be  found  in  achievements  comparable  rather 
with  those  of  the  author  or  the  scientist,  of  the  inventor 
or  the  statesman.  And  the  joys  sought  in  the  profession 
of  business  must  be  like  their  joys  and  not  the  mere  vulgar 
satisfaction  which  is  experienced  in  the  acquisition  of 
money,  in  the  exercise  of  power  or  in  the  frivolous  pleasure 
of  mere  winning."  ^ 

As  red-blooded  men  turn  from  the  futihty  of  mere  money- 
making  and  fail  to  find  satisfaction  in  the  depressing  work 
Plus  large  of  charity,  they  may  discover  in  a  great  work 
for'°construct-  ^^  Constructive  justice,  like  consumer's  co- 
ive  service  operation,  full  scope  for  their  powers  of  mind 
and  heart.  "Nothing,"  says  John  Cairns,  manager  of  a 
Scotch   Co-operative  Society,   "purifies  the  mind  like  a 

1  Richard  C.  Cabot:  What  Men  Live  By. 

2  "Business,"  he  goes  on  to  say,  "will  be,  and  to  some  extent  already 
is,  one  of  the  professions."  The  distinguishing  marks  of  a  profession 
he  takes  to  be  these: 

First,  "A  profession  is  an  occupation  for  which  the  necessary  pre- 
liminary training  is  intellectual  in  character,  involving  knowledge 
and  to  some  extent  learning,  as  distinguished  from  mere  skill." 

Second,  "It  is  an  occupation  which  is  pursued  largely  for  others  and 
not  merely  for  one's  self." 

Third,  "It  is  an  occupation  in  which  the  amount  of  financial  return 
is  not  the  accepted  measure  of  success." 


ENLISTING  AND  DEVELOPING   STORE   WORKERS        1 55 

great  ethical  idea,  around  which  all  others  organize  them- 
selves, and  that  contained  in  the  nature  of  our  occupation 
is  supremely  qualified  to  be  the  guide,  the  inspiration  and 
ideal  of  a  man's  industrial  hfe."  Here  is  a  field  in  which 
the  worker  cannot  only  get  a  living,  but  through  which 
he  may  live  while  he  works. 

One  of  the  big  jobs  for  the  builders  of  co-operation  in 
America  is  the  enlisting  and  training  of  young  men  and 
women  of  a  high  order  for  this  work.  Such  enlistment 
will  be  a  boon  to  both  workers  and  cause.  Professor  Mar- 
shall, the  leading  economist  of  England,  is  quoted  as  say- 
ing at  the  Ipswich  Co-operative  Congress,  "In  the  world's 
history  there  has  been  one  waste-product  so  much  more 
important  than  all  the  others  that  it  has  a  right  to  be  called 
the  waste  product.  It  is  the  higher  ability  of  the  working 
classes,  the  latent  and  undeveloped,  the  choked  up  and 
wasted  faculties  for  higher  work  that  for  lack  of  oppor- 
tunity have  come  to  nothing."  Reference  is  here  made 
more  particularly  to  the  latent  ability  to  manage,  which 
the  co-operative  system  affords  the  opportunity  to  de- 
velop. But  is  it  not  true  that  there  is  an  equal  waste 
through  lack  of  opportunity  to  express  good  will,  social- 
mindedness  and  unselfish  helpfulness?  Let  the  store  work 
be  laid  out  and  conceived  of  as  a  job  requiring  high  grade 
abihty  and  character,  and  there  is  little  doubt  that  the 
challenge  will  be  met.  Clear-headed,  red-blooded,  upward- 
looking  young  men  and  women  will  gravitate  toward  the 
movement,  and  in  time  come  to  represent  it. 

Probably  the  best  way  in  the  long  run  to  obtain  store 
workers  is  to  take  good,  bright  boys  and  girls  from  school 
and  train  them.    A  candidate  with  such  knowl-  workers 
edge  of  store  work  and  goods  as  he  may  have  should   begin 

r      ,       ,  ,  .    °         ,  rf^  young  and  re- 

gained   through   experience   in   a   profit   store  ceive    careful 

may  be  desirable  as  a  make-shift,  but  as  a  rule  training 

he  has  the  wrong  point  of  view  and  too  much  to  unlearn  to 

make  him  good  co-operative  material. 

The  subject  of  compensation  of  help  is  a  large  one.  Per- 
haps the  first  thing  to  be  said  is  that  low-grade  help  is  dear 


156         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

at  any  price.  On  the  other  hand,  the  help  which  is  made  high 
priced  by  things  done  in  a  profit  store — because  he  is^a  good 
Compensa-  "salesman" — may  be  a  bad  investment  in  a  co- 
ti°°  operative  store.    It  is  desirable  to  pay  high  sal- 

aries—somewhat higher  than  the  average  store  pays— but  the 
salary  should  be  fully  justified  by  actual  service  performed. 
Nor  can  a  co-operative  store  afford  to  pay  a  high  salary  to 
an  employee  on  the  ground  that  he  needs  it  to  live  on.  The 
true  policy  is  to  get  people  of  good  capacity  and  so  organize 
the  work,  and  train  and  inspire  the  employee  as  to  get  good 
results,  and  then  pay  good  salary.  The  aim  is  to  pay 
according  to  service  performed.  While  there  may  be  no 
accurate  and  tangible  measure  of  product,  as  near  an  ap- 
proach as  possible  should  be  made.  It  is  desirable  to  make 
advances  in  salary  as  soon  as  the  work  justifies  doing  so, 
and  much  better  to  make  such  advances  before  employees 
have  good  reason  to  ask  for  them. 

Some  English  stores  have  a  co-operative  plan  whereby 
«ach  employee  receives  a  dividend  or  bonus  on  his  salary 
„  »      equal  to  the  dividend  returned  to  members  on 

Bonus  system     ^  ,  •    •         <*_ 

in  some  Eng-  purchascs.  Thus  an  employee  receiving  Jj^soo 
lish  stores  ^^^  ^^^^  salary  would  receive  a  bonus  of  $50  if 
a  ten  per  cent  dividend  were  paid  on  purchases  of  members 
during  the  year.  There  is  some  approach  to  justice  in  such 
a  plan,  and  some  co-operators,  notably  Mr.  G.  J.  Holyoake, 
strongly  approve  it.  There  would  seem  to  be  some  justice 
in  recognizing  the  claim  of  the  help  as  a  whole  to  share  in 
the  prosperity  of  the  store.  But  the  basis  is  apparently 
crude  and  leaves  much  to  be  desired.  For  instance,  the 
employee  who  does  his  best  for  the  success  of  the  business  re- 
ceives no  special  recognition  for  his  faithfulness,  as  he  gets 
only  the  same  rate  of  bonus  as  the  most  indifferent  employee. 
The  plan  does  not  seem  to  have  inspired  employers  very 
much  and  has  not  on  the  whole  worked  very  well.  It  is  in 
use  only  in  a  small  minority  of  the  stores.  It  would  be  very 
desirable,  however,  if  some  plan  could  be  worked  out  which 
would  encourage  devotion  and  efficiency  on  the  part  of  em- 
ployees and  could  also  commend  itself  as  meeting  the  de- 


ENLISTING  AND   DEVELOPING   STORE   WORKERS        1 57 

mands  of  justice.  Here  again  is  a  need  for  invention  and 
study,  an  endeavor  which  should  enlist  the  interest  of  em- 
ployers and  employees  together.  The  need  is  to  get  at  some 
basis  of  compensating  men  and  women  for  the  work  they 
really  do  instead  of  paying  them  for  the  time  they  spend. 
We  want,  however,  to  avoid  the  evils  of  piece  work  which 
grow  out  of  the  inability  accurately  to  gauge  the  work  done 
by  any  individual  employee. 

No  part  of  the  organization  and  conduct  of  a  co-operative 
store  is  more  important  than  the  proper  training  and  man- 
agement of  store  workers.     It  is  they  who  do    Training 
the  work  and  they  who  come  in  constant  in-     workers 
timate  contact  with  the  consumer  public.    The  work  is  com- 
plicated and  may  be  done  in  many  wrong  ways,  but  in  only 
one  best  way.    To  find  and  follow  that  one  best  way  is,  of 
course,  the  key  to  success.    There  are  two  groups  of  subjects 
for  the  employee  to  study:  one  dealing  with  co-     Subjects  for 
operation,  store  methods  and  goods, — subjects     ^^'^y 
on  which  all  store  workers  should  be  informed,  and  the  other 
the  more  technical  subjects  belonging  to  certain  positions: 
bookkeeping,  co-operative  salesmanship,  co-operative  ad- 
vertising, delivery,  stock  keeping,  and  the  like. 

Every  employee  of  the  store  from  top  to  bottom  should 
know  something  of  the  principles  of  co-operation,  each 
according  to  his  mental  capacity;  each  should  grasp  its 
spirit  and  motive;  each  should  know  the  why  and  the  how 
of  the  co-operative  store.  The  more  each  knows  about  co- 
operation the  more  heartily  will  he  take  hold  of  the  work, 
the  more  personal  satisfaction  will  he  get  out  of  it,  and  the 
more  valuable  will  his  service  be  to  the  store.  Not  more  is 
the  selling  instinct  valued  in  a  profit  store  than  should  be 
the  co-operative  instinct  in  a  consumer-owned  store.  The 
co-operative  training  of  help  will  probably  in-  Training  in 
elude  first  the  reading  of  the  most  simple  tracts  co-operative 
and  later  the  more  advanced  works.  This  p"°"p  ^^ 
should  be  supplemented  by  class  work.  The  whole  will 
usually  be  under  the  care  of  the  educational  committee  of 
the  store  and  should  in  no  wise  be  neglected. 


158         CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

For  an  employee  thoroughly  to  learn  store  routine  and 
methods  is  to  learn  the  technic  of  a  valuable  trade  provided 
In  store  rou-  he  learns  the  right  way  of  doing  things  and  not 
*i°®  merely  a  way.    Not  enough  emphasis  has  been 

placed  upon  this  fact  in  this  country.  Efficiency  methods 
are  now  due  in  this  line  of  work  and  it  is  to  be  made  a  serious 
profession.  Books  ^  are  now  appearing  at  short  intervals 
which  take  the  subject  seriously  and  we  are  undoubtedly 
soon  to  see  the  same  attention  given  to  the  economical  and 
efficient  conduct  of  a  store  that  has  for  some  time  been  given 
to  the  systematizing  of  shops  and  factories.    But  the  ground 

Need  of  ^^  ^^^^^  ^^^  ^^^  ^^^  ^^^^  manager  and  committee 
system  will  be  compelled  to  work  out  their  own  courses 

in  store  wor  ^^  quite  an  extent.  How  to  put  up  orders,  how 
to  take  in  cash,  how  to  find  costs  in  such  detail  as  to  be  of  the 
most  use,  how  to  keep  stock,  how  to  deliver,  are  some  of  the 
smaller  questions  involved,  besides  the  two  larger  ones  of 
buying  goods  and  selling.  There  is  no  room  in  this  chapter 
to  enlarge  upon  the  subject-matter  to  be  used  in  this  con- 
nection. Probably  the  most  profitable  text-book  will  be 
the  daily  operation  of  such  plans  as  have  been  evolved  for 
the  individual  store  in  which  the  work  is  to  be  done. 

In  making  use  of  current  books  on  store  practice,  allow- 
ance will  have  to  be  made  for  the  wrong  point  of  view,  as  to 
pushing  goods  on  to  the  consumer,  a  thing  which  looms  large 
in  books  on  salesmanship,  but  for  which  the  co-operative 
store  has  no  use.  I  cannot  too  strongly  urge  careful  training 
in  store  methods  and  strict  compliance  with  best  ways. 
Besides  the  advantage  of  getting  things  done  with  the  least 
effort  and  time  consumers  like  to  see  things  done  well.  I 
have  known  people  to  stop  trading  at  a  store  because  pack- 
ages were  not  put  up  satisfactorily. 

As  to  knowing  goods,  there  is  special  reason  why  the  co- 
operative store  salesman  and  other  workers  should  be  well 

'Among  recent  works  are:  The  Economics  of  Retailing,  by  P.  H. 
Neystrom,  Ph.  D.  (Ronald  Press,  N.  Y.),  Retail  Selling  and  Store 
Methods  by  same  author  (Appleton's),  Keeping  up  with  Rising  Costs, 
Sammons  (N.  W.  Shaw,  Chicago),  Retail  Buying. 


ENLISTING  AND  DEVELOPING   STORE   WORKERS        1 59 

informed.  Consumers  have  a  right  to  assume  that  they  can 
get  perfectly  unbiassed  information  which  is  reliable.  With- 
out the  profit  bias  the  co-operative  salesman  has  the  priv- 
ilege and  the  duty  to  impart  useful  information  to  the  con- 
sumer and  give  valuable  advice.  These  should  be  based 
upon  a  thorough  knowledge  of  the  facts.  Consumers  are 
ready  for  this  kind  of  service  when  it  comes  from  the  right 
source  and  is  given  in  the  right  spirit.  The  co-operative 
employee,  therefore,  should  not  be  an  automaton,  a  slot 
machine,  only  handing  out  advertised  brands  previously 
selected  by  the  customer.  He  can  render  much  more  val- 
uable service  and  should  be  fitted  to  do  so.  He  will  come  to 
take  keen  satisfaction  and  pride  in  his  work  and  have  a 
consciousness  of  real  usefulness  to  those  most  in  need  of 
guidance.    In  a  food  store  this  is  especially  true. 

Probably  the  instruction  in  store  methods  and  goods 
will  be  under  the  guidance  of  the  manager.  This,  how- 
ever, may  depend  upon  circumstances.  A  Training  un- 
professional teacher  of  these  things  may  be  uon  of  man- 
available,  or  part  of  the  work  may,  as  we  have  ^^^f.  *"f  ^^- 

1  ,  1  ,  ,     -^     .  ucational 

seen,  be  taken  up  by  the  educational  com-  committee 
mittee.  Public  schools  in  some  localities  are  taking  up 
store  work  in  connection  with  vocational  training,  but 
it  will  probably  be  some  time  before  such  instruction  will 
be  generally  available.  Probably  tlie  best  plan  will  be  the 
formation  of  classes  under  the  instruction  of  the  manager. 
Much  more  attention  is  given  to  the  thorough  training 
of  store  workers  in  England  than  in  this  country,  espe- 
cially in  the  food  trade.  The  Institute  of  Cer-  Careful  train- 
tified  Grocers,  whose  certificate  is  worth  striv-  '^Ij-^ers  ^la^ 
ing  for,  requires  of  its  candidates  three  years  England 
of  practical  work  in  a  store  and  the  passage  of  rigid  ex- 
aminations, the  first  and  second  years  of  which  embrace 
some  forty-eight  searching  questions  on  groceries,  book- 
keeping, commercial  arithmetic,  English,  law,  methods  of 
business,  blending  teas  and  cofifees,  and  so  on.  English 
co-operative  stores  have  many  classes,  conduct  summer 
schools,  and  are  discussing  a  co-operative  college. 


l6o         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

Two  things  should  be  especially  looked  to.  The  student 
should  not  be  given  nor  should  he  undertake  voluminous, 
staff  meetings  forbidding,  or  irrelevant  matter  so  as  to  get 
and  their  use  qQ  |-]^g  track  and  become  discouraged.  He 
should  be  kept  at  his  study  by  proper  encouragement. 
He  should  attend  frequent  staff  conferences  where  all 
sorts  of  store  experience  and  questions  may  be  discussed. 
Here  an  excellent  opportunity  is  afforded  to  encourage 
employees  to  make  suggestions  for  the  benefit  of  the  busi- 
ness. Employees  should  be  urged  to  make  a  note  of  un- 
answered questions  asked  by  customers,  or  unusual  oppor- 
tunities offered  to  give  information.  These  may  be  dis- 
cussed in  staff  meetings  with  profit.  When  answers  are  not 
forthcoming,  let  the  question  be  referred  to  someone  for 
report  at  the  next  meeting.  Good  reference  books  and 
trade  papers  should  be  accessible  to  all  the  employees. 
In  some  cases  it  will  be  well  to  have  a  set  subject  for  dis- 
cussion with,  perhaps,  an  informal  paper  given.  It  is  in- 
teresting to  discuss  amount  of  sales  for  a  given  week,  ex- 
penses, comparisons  of  current  business  with  that  of  the 
preceding  quarter  or  the  corresponding  quarter  of  last  year, 
together  with  comments  and  suggestions  arising  there- 
from. Entire  freedom  and  frankness  are  possible  in  a 
store  where  there  are  no  secrets. 

It  has  been  proven  over  and  over,  of  late,  that  the  only 

way  to  get  the  maximum  of  product  from  help  is  to  touch 

the  right  springs.    The  best  staff  cannot  be  driven  to  give 

good  results:  it  must  be  inspired.    The  manager  who  treats 

workers  as  machines  is  a  failure  so  far  as  the  handling  of 

help  is  concerned.    Especially  is  this  true  in  a  store  where 

there  is  so  much  need  for  the  use  of  brains.     The  ideal 

As  elsewhere,  manager  should  be  a  center  of  enthusiasm  so 

in  the"^  work  contagious,  kindly,  and  inspiring,  that  the  staff 

is   the   most  cannot  remain  untouched.     There  is  no  sub- 
productive  .         .  ,  .  .      , 
motive           stitute  for  real  interest  in  the  work  as  a  means 

of  getting  results.    That  interest  can  only  come  when  the 

employee  is  given  a  chance  to  use  his  brain  and  initiative. 

Information  as  to  objects  and  methods  is  imperative  to 


ENLISTING  AND  DEVELOPING  STORE   WORKERS        l6l 

get  best  results.     It  is  this  which  gives  the  manager  his 
zest  and  the  same  is  needed  by  his  assistants. 

The  Manager 

The  manager  having  full  charge  of  a  co-operative  store, 
occupies  a  position  of  large  responsibility  with  correspond- 
ing privilgees  for  usefulness.  He  is  to  interpret  the  wants 
and  needs  of  consumers.  He  must  know  goods  and  their 
sources,  bring  back  to  consumers  the  best  intelligence  re- 
garding commodities  and  finally,  he  must  pass  the  goods 
from  their  source  to  the  consumer  in  the  most  efficient 
manner. 

His  study  of  the  requirements  of  consumers  will  consist 
not  only  of  an  inquiry  into  what  they  do  buy,  but  also 
what  they  would  buy  after  adequate  investigation.  That 
is,  he  should  learn  the  real  needs  of  consumer-members  in 
order  to  meet  them  as  completely  as  possible  to  the  end 
that  a  dollar  may  buy  the  maximum  of  value.  His  inves- 
tigation of  goods  and  sources  will  include  not  the  passive 
acceptance  of  the  products  offered,  but  a  thorough  search 
as  to  real  merits  of  commodities,  their  sources  and  cost. 

These  things,  with  the  organization  and  administration 
of  the  processes  which  pass  the  intelligence  about  the 
goods,  and  the  goods  themselves,  to  the  consumer,  the 
inspiring  and  guiding  of  help,  such  accounting  as  will 
enable  him  to  eliminate  any  wasted  effort  and  bring  about 
the  greatest  efficiency  is  not  a  small  undertaking.  And 
all  this  is  to  be  motived  and  executed  along  Rochdale  lines. 

Here  is  large  scope  for  the  exercise  of  invention  and 
initiative.  But  there  goes  with  these  ideal  qualities  a 
constant  hindrance  in  the  shape  of  insistent  demands  on 
time  and  attention  of  exacting  and  absorbing  detail  work. 
Here  is  a  job  for  a  full-sized  man — a  larger  one  than  usually 
finds  his  way  to  the  corresponding  position  in  the  profit 
store.  Fortunate  indeed  are  the  directors  and  officers  who 
find  the  man  upon  whom  they  are  justified  in  throwing 
all  these  responsibilities,  confident  that  he  will  catch  and 
carry  the  spirit  of  the  organization  to  the  public  and  evolve 


l62         CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

the  eflfective  instrument  needed  to  carry  out  the  common 
purposes. 

At  all  events,  boards  will  generally  find  it  best  to  place 
Directors  upon  the  manager  the  full  authority,  that  he 
should    place       ^  ^^  j^g],^  responsible  for  results.     Happy 

manager    in  -'  '■ 

authority  so  will  be  the  day  when  co-operative  store  prac- 
him^respon-  tice  is  SO  standardized  as  to  make  such  a  con- 
sibie  ferring  of  power  less  a  leap  in  the  dark  than 

.  is  now  the  case. 

But  standardized  co-operative  methods,  like  trained  co- 
operative store  managers,  comes  under  the  head  of  work 
yet  to  be  done  in  this  country.  The  pressing  need  for  this 
development,  however,  is  matched  by  the  large  room  for 
improvement. 


CHAPTER  XIII 

WHEN  AND  WHERE  TO  START 

The  next  practical  question  to  take  up  is  where  and 
when  it  is  wise  to  undertake  the  starting  of  a  co-operative 
enterprise,  for,  in  its  present  state  of  develop-     ^jj^^    ^^d 
ment    in    this    country    co-operation    should     where  to 
only  be  undertaken  where  the  conditions  are 
favorable  for  success.     Two  things  are  needed:  first,  the 
right  kind  of  people,  those  who  can  work  together  and 
know  how  to  co-operate,  or  can  and  will  learn     The    right 
how.    A  few  people,  hot  with  enthusiasm,  will     ^°"p 
not  go  far  unless  this  enthusiasm  can  be  transmitted  to 
others  and  become  intelligent  conviction  which  is  strong 
enough  to  persevere.    How  many  will  join  and  how  much 
will  they  join?    Will  they  only  join  until  they  are  asked 
to  submit  to  some  slight  inconvenience  or  are  lured  by 
apparent  bargains  in  private  stores?  ^    Sometimes  people 

'  Much  may  be  done  at  the  time  of  organization  by  frankly  facing 
these  possibilities  and  probabilities  and  recognizing  that  it  is  hardly 
fair  to  ask  some  of  the  number  to  act  as  directors  and  put  their  hard 
work  and  much  worry  into  the  conduct  of  the  business,  while  others 
indifferently  turn  aside  and  leave  the  loyal  to  bear  the  fixed  charges 
incurred  for  the  purpose  of  serving  the  whole  membership.  He  is  not 
a  co-operator  who  is  wiUing  merely  to  accept  such  savings  and  ben- 
efits as  are  brought  to  him  with  no  effort  on  his  part.  Only  he  is  a 
co-operator  who  can  be  of  service  to  such  a  movement,  who  is  willing 
to  forego  some  conveniences,  to  put  up  with  some  annoyances  and  to 
stand  loyally  by  for  the  sake  of  what  he  believes  will  be  the  ultimate 
advantages  of  the  movement.  Only  such  loyalty  can  bring  success. 
There  will  be  plenty  of  people  to  buy  the  goods  when  the  savings  are 
entirely  obvious  to  everyone,  nor  will  the  people  who  then  come  for- 
ward be  entitled  to  any  particular  credit  or  thanks,  but  during  the 
early  stages  while  the  co-operative  idea  is  being  worked  out  and  while 


164         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

of  different  nationalities  find  it  difficult  to  work  together. 
Even  religious  or  political  creeds  are  sometimes  permitted 
to  divide  people.  A  very  favorable  group  is  one  composed 
of  the  members  of  some  other  active  organization  like  a 
labor  union  where  the  lessons  incident  to  cheerful  abiding 
by  the  will  of  the  majority  have  been  learned.  Of  course 
it  is  a  great  gain  if  the  prospective  co-operators  are  accus- 
tomed to  study  and  discuss  together  their  problems  of 
li\'ing.  If  there  is  the  right  group  or  the  making  of  the 
right  kind  of  a  group,  the  second  question  is  as  to  the  com- 
The  common  mon  need  to  be  met.  The  first  aim  of  co- 
need  operative  self-supply  is  to  get  either  better 
quality  of  goods  or  to  get  them  at  lower  cost,  or  both.  If 
goods  of  as  good  quality  and  as  low  prices  as  possible  for 
the  group  to  supply  themselves  are  already  being  sold  in 
the  community,  then  the  need  in  this  direction  for  co- 
operative supply  does  not  exist.  If,  for  example,  in  a 
community  where  retailing  expenses  should  be  normal, 
it  is  costing  the  consumer  forty  per  cent  to  get  groceries 
from  the  manufacturer  or  importer  to  the  consumer,  a 
remedy  should  be  sought.  If,  on  the  other  hand,  the  cost 
to  the  consumer  for  the  services  of  the  wholesale  and  the 
retailer,  including  delivery,  is,  say,  only  twenty  per  cent, 
the  chances  are  that  a  co-operative  store  could  not  suc- 
cessfully compete  with  present  dealers  and  would  not, 
therefore,  be  able  to  give  its  members  any  pecuniary  ad- 
vantage— that  is,  until  the  co-operative  system  is  farther 
advanced  in  America  than  it  is  now.  In  other  words,  it 
would  not  be  wise  to  match  present  imperfect  co-operation 
with  such  local  conditions.  ^ 

the  consumers  are  learning  to  be  at  home  in  the  management  of  mer- 
chandizing machinery  on  their  own  behalf,  there  is  need  for  sym- 
pathetic loyalty  and  patience. 

1  A  careful  estimate  should  be  made  of  the  expense  of  conducting 
the  business  and  these  in  turn  expressed  in  percentages.  To  arrive  at 
these  figures  it  would  be  necessary  to  figure  on  a  basis  of  a  certain 
amount  of  sales  per  week,  for  purchasing  prices  to  some  extent  and 
running  expenses  to  a  very  large  extent  depend  upon  the  size  of  the 


WHEN  AND   WHERE   TO   START  1 65 

There  are  various  other  things  to  be  taken  into  considera- 
tion. An  estimate  should  be  made,  for  instance,  of  the 
ehgible  candidates  for  membership  and  patronage  of  the 
store  in  addition  to  the  charter  member  group.  Ehgibihty 
means,  among  other  things,  willingness  to  pay  cash  for 
goods  instead  of  persisting  in  the  habit  of  buying  on  credit. 

To  conduct  the  business  economically  a  fairly  uniform 
service  must  be  given  to  all.  The  kind  of  service  will  be 
determined  upon  by  a  majority  of  the  group.  For  instance, 
in  England  the  clerk  hire  is  reduced  to  a  lower  per  cent  on 
the  goods  handled  than  is  usual  in  the  medium  grade  store 
in  this  country  on  account  of  the  fact  that  during  busy  days 
and  hours  the  members  are  more  willing  than  the  average 
American  woman  to  wait  in  line  to  be  served. 

The  store  should  aim  to  serve  people  whose  wants,  due  to 
nationality  and  habit,  are  similar,  so  that  it  need  not  go 
to  the  expense  of  keeping  a  wide  range  of  kinds  and  grades 
of  goods. 

business.  Now,  to  ascertain  the  business,  say,  per  week  or  per  month, 
the  families  who  propose  joining  in  the  undertaking  should  give  figures 
as  to  what  their  purchases  amount  to  and  when  the  requirements  of 
each  family  in  the  group  have  been  approximately  ascertained  and 
these  added  together,  this  total  will  furnish  a  basis  of  tentative  cal- 
culation. We  will  assume  that  one  hundred  families  are  ready  to  join 
in  the  enterprise  and  that  careful  inquiry  has  disclosed  that  their  re- 
quirements would  amount  to  an  average  of  forty  dollars  per  family 
per  month.  Here,  then,  is  a  total  sale  of  four  thousand  dollars  per 
month.  Quotations  in  detail  show  that  the  wholesale  price  of  these 
goods  is,  say,  thirty-two  hundred  dollars,  showing  a  gross  profit  of 
eight  hundred  dollars  or  twenty  per  cent.  Now  estimate  the  salary 
of  the  manager,  clerks,  cashier,  delivery  boys,  delivery  rigs,  horse 
keeping,  etc.,  and  it  will  be  ascertained  that  all  these,  including  rent 
and  miscellaneous  expenses  will  come  within  six  hundred  dollars  per 
month  or  fifteen  per  cent.  That  would  leave  a  margin  of  only  two 
hundred  dollars  net  profit  without  allowing  for  unforeseen  contin- 
gencies, but  if  we  assume  that  the  non-member  trade  wnR  be  sufficient 
to  offset  these  contingencies,  we  have  an  enterprise  which  is  on  a  basis 
of  fair  safety,  provided  all  those  who  are  now  ready  to  join  the  society 
will  give  the  store  their  whole  trade. 


1 66         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

General  business  conditions  should  be  studied.  If  the 
towTi  is  largely  devoted  to  manufacturing,  the  stability  of 
these  industries  should  be  looked  into.  Much  the  same 
facts  are  required  as  would  be  sought  by  a  good  profit  mer- 
chant contemplating  the  location  of  a  store.  It  is  only  when 
Guess  work  ^^^  these  Conditions  are  taken  into  intelHgent 
should  not  be  consideration  and  an  intimate  estimate  made  of 
rehed  upon  ^-^q  requirements  of  the  prospective  members 
that  an  undertaking  should  be  seriously  considered.  Cal- 
culations should  be  carried  as  far  as  possible  and  guess 
work  reduced  to  a  minimum. 

It  is  not  wise  to  depend  upon  any  considerable  amount 
of  trade  from  those  who  do  not  join  at  the  outset,  unless 
conditions  are  exceptional.  It  is  only  when  success  has 
been  practically  demonstrated  that  non-member  trade  can 
be  attracted  in  any  considerable  volume. 

It  will  be  seen  from  these  suggestions  that  the  trade  of  the 
membership  should  be  so  committed  as  to  be  relied  upon. 
If  the  preparations  are  made  and  expenses  of  rent,  etc.,  in- 
curred to  serve  two  hundred  families  and  half  the  members 
desert,  leaving  a  double  burden  upon  the  loyal,  the  chances 
will  be  against  survival. 

This  raises  the  interesting  question  of  how  far  the  mem- 
bership should  be  committed  to  trade  at  the  store.  Some 
•'  Fair-  would  like  to  go  in  if,  from  the  start,  they  could 

weather  co-  buy  goods  of  better  quality  at  lower  cost  and  be 
operators  better  served  than  would  be  possible  elsewhere. 
Of  course,  a  membership  of  this  kind  is  a  rope  of  sand. 
Member  loyalty  is  the  keynote  of  co-operative  success.  But 
how  much  shall  the  member  be  expected  to  put  up  with  in 
the  way  of  higher  prices,  or  inferior  goods  or  service?  That 
question  should  be  fully  discussed  at  the  start  and  a  clearly 
understood  agreement  arrived  at.  This  agreement  might 
be  one  of  the  conditions  which  should  help  to  determine 
whether  it  is  wise  to  start  the  enterprise. 

The  wise  plan  is  to  prepare  for  obstacles  and  misfortunes 
and  then  expect  success.  A  manager  may  be  a  disappoint- 
ment.   Unforeseen  obstacles  may  arise  in  the  form  of  new 


WHEN  AND   WHERE   TO   START  167 

competition;  or  united  opposition  on  the  part  of  whole- 
salers or  competitors,  though  antagonism  of  competitors 
is  quite  as  likely  to  help  as  to  hurt  the  co-operative.  One 
of  the  primary  conditions — perhaps  the  most  important 
condition — which  determines  the  wisdom  of  starting  is  the 
character,  determination  and  dependability  of  members. 

Assuming  that  the  conditions  look  toward  a  favorable 
future  of  a  store,  all  these  considerations  also  have  a  bearing 
on  the  kind  of  a  store  to  start.  Perhaps  a  group  Conditions 
starting  out  with  the  expectation  of  establishing  fyp|"^f''storI 
a  full-fledged  store  of  elaborate  service  would  to  start 
better  cut  out  delivery  and  all  unnecessaries  so  as  to  run  a 
small  store  at  a  minimum  of  expense;  or,  in  many  cases,  it 
is  better  to  start  with  a  buying  club  with  only  nominal  ex- 
pense, and  buy  together  only  the  articles  upon  which  there 
is  a  sure  saving.  Learning  to  work  together  in  this  way,  the 
store  may  come  on  a  safe  basis  later.  ^ 

An  important  question,  is  whether  there  is  a  suitable 
manager  in  sight. 

In  short,  a  co-operative  store  should  be  started  only  when 
it  is  discovered  by  intelligent  investigation  that  there  is  a 
clear  need  and  a  promising  opportunity  for  it.  It  is  very 
much  to  be  hoped  that  ere  long  a  central  organization  of  co- 
operators  will  be  in  a  position  to  make  or  supervise  such  sur- 
veys and  investigations,  thus  bringing  to  bear  the  skill  and 
judgment  of  trained  and  experienced  organizers.  Even 
now  it  is  best  to  call  in  such  authorities  or  experienced  co- 
operators  as  can  be  found. 

The  question  may  be  asked  why,  if  the  co-operative  plan 
is  inherently  more  efficient  and  economical,  it  cannot  be 
made  to  supersede  profit  merchandizing  any-  why  will  a  co- 
where.    The  answer  is  that  while  co-operation  operative 

,  .   ,  store  not  suc- 

appears  to  possess  the  advantages  wnicli  are  set  ceed    any- 
forth  in  this  book,  these  fundamental  and  benefi-  '*^"® 
cent  principles  have  not  yet  been  adequately  worked  out  and 
embodied  in  concrete  form  to  fit  American  needs.    And  un- 
til they  are,  the  greater  experience  of  the  profit  merchant 
1  For  fuller  discussion  of  buying  clubs  see  next  chapter. 


1 68         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

is  likely  to  more  than  offset  such  of  these  advantages  as  can 
be  developed  in  the  new  enterprise.  The  extent  to  which 
the  initiative,  care  and  sympathetic  interest  of  the  consumer 
can  eliminate  certain  apparently  needless  distribution  ex- 
penses and  burdens  now  borne  by  the  consumer  has  not 
been  so  demonstrated  in  this  country,  and  the  methods  of 
bringing  these  economies  about  have  not  been  so  developed 
and  standardized  that  they  can  be  successfully  applied  ex- 
cept under  fairly  favorable  conditions. 

Right  here  is  a  great  work  which  should  be  undertaken  by 
a  group  of  people  who  are  willing  to  labor  and  sacrifice  to 
establish  the  new  distributive  order. 

Meantime  it  is  desirable,  from  the  standpoint  of  the  move- 
ment as  a  whole  and  also  from  that  of  the  local  group,  that 
stores  be  established  only  where  conditions  are  such  as  to 
give  promise  of  success  even  with  the  imperfect  knowledge 
now  available. 


CHAPTER  XIV 
BUYING  CLUBS 

Buying  clubs  are  becoming  very  common.  Groups  of 
neighbors,  or  the  employees  of  an  industrial  establishment, 
or  members  of  a  woman's  club,  or  farmers'  organizations, 
form  themselves  into  a  club  to  bunch  their  orders  for  sup- 
plies and  get  the  benefit  of  wholesale  prices.^ 

A  few  decades  ago  granges  saved  their  members  much 
money  by  bu>dng  large  quantities  of  farm  and  family  sup- 
plies in  this  way.  Since  the  parcels  post  law  went  into  effect, 
postal  buying  clubs  have  been  organized  in  various  parts  of 
the  country.  The  express  companies,  deprived  of  a  part 
of  their  traffic  by  the  parcels  post,  have  gone  into  the  hand- 
ling of  farm  products  between  the  farm  and  the  kitchen. 
This  has  lead  to  the  formation  of  many  clubs,  the  number  of 
which  appears  to  be  growing. 

Buying  clubs  seem  to  be  of  two  kinds:  those  which  are 
promoted  and  inspired  by  express  companies  and  mail  order 
houses,  and  those  of  voluntary  initiative  where  Two  kinds  of 
consumers  start  out  of  their  own  motion  to  ^^^^^ 
study  to  cut  out  some  of  the  costs  of  ordinary  retail 
buying. 

While  the  bu}dng  club,  if  wisely  planned  and  managed, 
ahnost  always  enables  consumers  to  save  money,  the  clubs 
as  a  rule  are  short  lived.    The  grange  bu>ing  movement 

lAn  article  in  the  Outlook  for  Sept.  5,  1916,  by  John  R.  Colter, 
"The  Buying  Club  IMovemcnt,"  points  out  the  widespread  character 
of  these  groups,  many  of  them  very  active  and  effective. 

Ruth  Severance,  in  an  article  "Be  Your  Own  Grocer"  (Good  House- 
keeping, August,  191 1)  tells  of  her  ovm  experience  in  uniting  wth 
28  neighbors  to  buy  in  wholesale  lots.  Both  of  these  articles,  while 
brief  and  superficial,  indicate  the  promise  and  trend  of  the  movement. 


170         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

saved  its  members  hundreds  of  thousands  of  dollars  on 
fertilizers,  farm  machinery  and  other  supplies,  but  seems 
almost  wholly  to  have  disappeared.  The  small  isolated 
club  as  a  rule  soon  disbands. 

Why  is  this  so?  Each  consumer  who  joins  a  group  to  buy 
collectively  benefits  himself  and  helps  others  to  benefit  in 
the  same  way.  With  this  two-fold  motive,  why  should  the 
clubs  not  endure?  As  I  have  not  made  an  exhaustive  study 
of  the  question — which  I  hope  someone  will  do  before  very 
long — I  can  give  only  my  own  opinions  based  upon  limited 
observation  and  inquiry. 

It  seems  to  me  that  the  first  essential  of  successful  coUect- 
ciub  mem-  ive  buying  is  to  have  a  clear  idea  of  the  difference 
ailze  "^ffer-^"  in  service  between  buying  at  retail,  in  the  usual 
^lu'b  ^and  ^^°  ^^^'  ^^^  ^^^^  buying.  The  club  buyer  fails  to 
dealer  realize  what  services  the  retailer  performs  for 

him  which  the  consumer  must  forego  if  he  buys  at  wholesale 
through  his  club. 

Let  us  briefly  run  over  the  chief  items  of  service  which 
the  retailer  performs  for  the  consumer  and  give  a  rough 
figure  as  to  the  cost.  In  the  first  place,  the  dealer  uses  his 
trained  skill  and  time  to  buy  at  wholesale.  This  costs, 
say,  two  to  four  per  cent.  Then  the  goods  are  moved  to 
the  retail  store  and  delivered  to  the  consumer's  residence 
at  a  cost  of  from  two  to  six  per  cent.  Then  the  goods  are 
held  in  the  retailer's  store  till  the  consumer  wants  them 
which  costs  one  and  a  half  to  five  per  cent.  Salesmen  tell 
about  the  goods,  show  them  and  persuade  the  consumer 
to  buy.  This,  with  advertising,  costs  all  the  way  from 
six  to  ten  per  cent,  in  the  case  of  food  supplies;  and  more 
for  such  things  as  dry  goods,  shoes  and  jewelry. 

All  these  things  and  certain  others  that  are  incidental, 
like  heat,  light,  and  insurance  cost  the  average  retailer  of 
groceries,  meats  and  other  foods  17  per  cent.  His  gross 
profit  is  20  per  cent,  leaving  him  a  net  profit  of  3  per 
cent.^ 

'  These  figures  are  based  upon  extensive  investigations  made  by  the 
Curtis  Pubhshing  Company  of  Philadelphia. 


BUYING  CLUBS  17 1 

Now,  note  that  what  the  consumer  is  after,  through  the 
buying  club,  is  not  the  3  per  cent  net  profit  of  the  dealer 
merely,  but  also  the   17  per  cent  which  the  consumers 
retailer  pays  out  to  buy  service  for  the  con-  must  do  with- 

r^  •  •  r         iU     *'"*    certain 

sumer.  So,  the  pertment  question  lor  the  services  or 
consumer  to  ask  himself  is  whether  he  is  willing  P*y  ^^^  *^^™ 
to  go  without  these  services  in  order  to  save,  say,  one-fifth 
or  less  on  his  food.  Or,  is  he  too  fond  of  sa\dng  trouble 
for  himself  and  being  waited  upon?  Unless  the  consumer 
can  see  his  way  clear  to  deny  himself  the  privilege  of  wait- 
ing until  the  last  minute  to  order,  then  ordering  in  very 
small  quantities  to  save  the  trouble  of  exercising  fore- 
thought as  to  how  much  to  buy,  then  asking  to  have  it 
sent  around  "right  away,"  he  would  better  think  twice 
before  joining  the  buying  club.  Much  of  the  expense  of 
retaihng  is  due  to  the  willingness  of  the  consumer  to  ask 
for  needless  service.  Much  is  due  to  his  indolence.  All 
this  the  consumer  must,  of  course,  pay  for. 

The  successful  buying  club,  therefore,  must  be  com- 
posed of  people  who,  looking  these  facts  in  the  face,  are 
willing  so  to  plan  as  to  reduce  to  a  minimum  the  incon- 
venience of  doing  without  the  retailer's  ser\dces  and  then 
go  ahead  in  the  spirit  of  friendly  mutual  helpfulness. 
Groups  animated  by  these  motives  and  proceeding  in  an 
intelligent  way  can  make  material  savmgs  in  their  Uving 
expenses  and  get  genuine  satisfaction  out  of  their  under- 
taking. 

The  first  thing  to  do  when  considering  the  starting  of  a 
buying  club  is  to  get  such  information  as  is  available  on 
the  subject.  Write  to  the  Co-operative  League  co-operative 
of  America,  2  West  13th  Street,  New  York,  league 
for  pamphlets,  enclosing,  say,  twenty-five  cents  and  stating 
what  information  is  wanted.  The  League  will  send  a 
variety  of  Uterature.  Do  not  hesitate  to  ask  definite  ques- 
tions. This  organization  exists  solely  and  without  com- 
mercial motive  to  promote  co-operative  bupng,  especially 
through  the  buying  club,  which  to  many  of  us  seems  the 
ideal  nucleus  and  origin  of  the  healthy  co-operative.   Help- 


172         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

ful  pamphlets  will  undoubtedly  be  issued  from  time  to 
time  and  plans  developed  whereby  wholesale  buying  may 
be  facilitated. 

Those  interested  in  buying  dubs  should  also  ask  the 
Bureau  of  Markets  and  Rural  Organization  of  the  U.  S. 
Department  of  Agriculture,  Washington,  for  such  pam- 
phlets as  it  issues.  These  will  be  sent  free  of  charge.  Cir- 
culars on  consumers'  buying  may  also  be  obtained  from 
the  express  companies. 

The  buying  club  should,  at  the  outset,  deal  only  in  such 
goods  as  are  most  convenient  to  handle  and  are  sure  to 
show  a  saving.  Let  the  members  first  buy  package  goods 
in  such  quantities  each  as  enables  them  to  order  in  original 
cases.  From  this  it  is  easy  to  branch  out,  adding  one  or 
more  articles  at  a  time.  Meanwhile,  the  balance  of  the 
family  requirements  may  be  obtained  of  local  dealers. 
Low  possible  The  great  advantage  of  a  buying  club  over  a 
expense  of  co-operative  store  is  its  lower  operating  ex- 
buying  club  p^^^  n  ^n^y  be  necessary,  if  a  room  can- 
not be  had  free  in  the  home  of  one  of  the  members,  to  pay 
some  rent  for  a  small  ware  room,  and  a  few  simple  fixtures 
may  be  needed.  But  Httle  additional  expense  need  be 
incurred.  Of  course,  there  is  a  great  advantage  in  form- 
ing a  club  of  acquaintances  who  work  together  con- 
genially and  upon  whose  reliability  dependence  can  be 
placed.  We  need  not  say  that  the  member  must  have  a 
very  different  attitude  towards  a  buying  club  from  that 
towards  a  profit  store.  Upon  the  club  the  member  has 
no  claim  as  he  has  upon  the  dealer  to  whom  he  pays 
profit. 

If  the  transaction  of  club  business  can  be  made  the  oc- 
casion for  pleasant  social  intercourse,  the  by-products  of 
the  undertaking  may  be  decidedly  worth  while.  Likewise, 
much  profit  and  satisfaction  may  result  if  the  discussion 
of  commodities  and  of  co-operation  can  be  carried  on  with 
talks  by  members  and  others.  What  better  place  could 
there  be  for  the  study  and  discussion  of  household  economy, 
food  values  and  the  like? 


BUYING  CLUBS  173 

Very  small  clubs  may  operate  without  any  legal  form 
of  organization,  but  it  is  better  to  get  onto  ciub  should 
the  Rochdale  basis  as  soon  as  possible.    Direc-  |®J^jj^^°  * 
tions  for  doing  this  will  be  found  in  a  pamphlet  basis  as  soon 
(S  cents)  by  Scott  H.  Perky,  secretary  of  the  ^^  possible 
Co-operative  League  of  America,  referred  to  above. 

Before  going  far  toward  organization,  investigations 
should  be  made  as  to  the  means  of  obtaining  the  goods  at 
wholesale.  Some  of  the  large  wholesalers  refuse  to  sell  at 
wholesale  price  to  clubs  of  consumers  on  account  of  the 
objections  made  by  retailers  to  whom  they  sell  in  the  same 
town  with  the  club.  A  way  can  generally  be  found,  and 
one  part  of  the  job  of  the  club  is  to  find  this  way.  It  is 
sometimes  possible  to  get  the  buying  done  satisfactorily 
by  some  local  dealer  on  a  commission.  If  this  is  not  de- 
sirable or  practicable,  there  may  be  a  co-operative  store 
in  a  nearby  town  which  will  do  it.  An  effort  is  being 
made  by  the  Co-operative  League  to  form  a  chain  of  co- 
operative clubs,  that  they  may  help  each  other  by 
exchanging  ideas  and  information  and,  if  practicable, 
buy  together  to  get  the  price  advantages  of  larger  pur- 
chases. 

Another  obstacle  which  may  be  met  with  is  the  fact 
that  local  dealers  may  complain  where  members  buy 
through  the  club  the  most  profitable  goods,  leaving  the 
grocer  to  supply  the  sugar  and  other  articles  on  which  the 
margin  of  profits  is  very  small.  There  is  little  doubt, 
however,  but  that  places  can  easily  be  found  where  these 
goods  can  be  had  on  a  satisfactory  basis.  Of  course  if  a 
consumer  is  asking  for  credit,  the  obstacle  may  importance  of 
be  difficult  to  overcome.  One  object  of  co-  cash  trading 
operative  buying,  however — of  economical  buy-  °"  ^ 
ing  of  any  kind,  for  that  matter — is  to  get  away  from  the 
practice  of  asking  for  credit.  If  sufficient  self-denial  be 
exercised  at  the  start,  practically  any  consumer  can  get 
onto  a  cash  buying  basis;  and  cash  buying  is  the  way  to 
economy,  independence  and  peace  of  mind.  All  goods 
bought   through   the   club   should    be  paid    for  in   cash 


174         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

when  ordered.  To  disregard  this  rule  is  to  prepare  for 
trouble. 

One  must  never  try  to  side-step  the  fact  that  the  buying 
club  idea  involves  some  self-denial,  foresight  and  work. 
The  buying  club  is  not  made  for  those  who  are  willing  to 
drift  in  the  direction  of  least  resistance,  but  for  those  who, 
for  the  sake  of  wise  economy,  are  willing  to  take  some 
pains;  also,  for  those  who  wish  to  do  their  part  towards 
solving  the  problems  of  the  consumer.  The  work,  how- 
ever, can  and  should  be  so  divided  as  not  to  become  bur- 
densome to  anyone,  and  then  members  must  so  place  their 
orders  and  take  their  goods  as  to  reduce  labor  to  the  lowest 
point. 

Members  must  not  be  discouraged  by  the  fact  that  sav- 
ings seem  small  at  the  start.  Even  small  economies  count 
in  the  year  and  they  will  pave  the  way  through  persever- 
ance to  larger  ones.  It  is  a  good  plan  to  have  a  fair  and 
comprehensive  showing  from  time  to  time  so  that  members 
may  not  be  drawn  away  by  the  offer  of  misleading  "leaders " 
by  private  dealers.  Buying  club  members  will  find  it 
profitable  to  compare  notes  on  prices  and  places  to  buy 
articles  which  the  club  does  not  handle.  It  is  well  to  keep 
copies  of  the  catalogues  of  some  of  the  big  mail  order  houses 
at  the  headquarters. 

Buying  clubs  of  considerable  size  in  some  locations  can 
often  make  arrangements  to  get  special  discounts  on  goods 
Special  dis-  bought  of  certain  retailers,  in  consideration  of 
rangements  concentrating  the  trade  with  those  dealers, 
with    dealers  jtqj-   instance,    a   jewelry   or   furniture   house 

can    often    be  .111  1  r     i  1    1 

made  may  agree  to  give  all  the  members  of  the  club 

a  special  discount  of  ten  per  cent.  The  club  can  issue  an 
identification  card  to  members  and  a  list  of  the  members 
may  be  filed  with  the  dealer. 

These  discount  arrangements,  while  helpful  for  the  time 
being,  are  to  be  regarded  only  as  makeshifts  since  there  is 
still  in  such  buying  a  profit  unknown  in  rate  or  amount 
between  the  source  of  supply  and  the  consumer.  Co- 
operation does  not  tolerate  this. 


BUYING   CLUBS  175 

It  is  to  be  hoped  and  expected  that  buying  clubs  will 
be  so  organized  in  the  near  future  as  greatly  to  increase 
their  usefulness  and  lead  to  large  develop-  The  buying 
ment.  For,  not  only  are  they  a  good  thing  school^o^co^- 
in  themselves  for  the  membership,  but  they  operation  ^ 
afford  excellent  experience  and  education  for  co-operative 
buying  on  a  larger  scale. 


CHAPTER  XV 
PLANNING  A  CO-OPERATIVE  SOCIETY 

"Learn  to  unite — all  other  graces  will  follow  in  their  wished-foi 

places. " — HOLYOAKE. 

When  it  has  been  ascertained  by  proper  investigation 
that  a  group  of  the  right  kind  of  people — people  who  are 
good  co-operating  material — can  make  substantial  savings 
on  their  supplies  by  running  their  own  store,  it  is  well  to 
get  in  touch  with  an  experienced  co-operator  for  advice  and 
suggestions.  In  fact,  the  whole  process  of  organizing  can 
be  facihtated  if  an  organizer  of  the  right  kind  can  be  had 
on  the  right  terms.  However,  this  is  not  a  necessity  in  the 
average  group. 

After  this  sizing  up  of  the  local  situation  and  the  group 
above  referred  to,  the  next  most  important  question  is 
that  of  manager.  Indeed,  in  a  society  of  any  considerable 
size — having  a  business  of,  say,  $50,000  a  year — it  is  usually 
Better  wait  unwise  even  to  start  without  a  manager  in 
tui  manager  sight.  It  is  well  to  be  in  touch  with  him  even 
IS  in  sig  t  though  it  may  be  unwise  to  rely  too  much 
upon  his  judgment  and  advice  as  to  the  larger  questions  of 
organization,  especially  if  he  be  not  by  belief  and  experience 
a  co-operator.  In  case  the  store  be  a  small  one  which  may 
have  evolved  from  a  buying  club  the  question  of  manager 
is  of  real  concern,  though  the  manager  be  a  detail  man  to 
act  immediately  under  the  direction  of  the  committee. 

Now,  what  is  the  right  kind  of  manager?  If  a  skilled 
and  experienced  merchandizer  of  undoubted  integrity 
who  is  also  a  sincere  and  competent  co-operator  cannot 
be  had,  shall  the  society  prefer  the  managerial  skill  or  the 
co-operative  aim  and  spirit  if  only  one  can  be  had?  Prob- 
ably that  would  depend  upon  many  things  including  the 


PLANNING  A   CO-OPERATIVE   SOCIETY  1 77 

real  temperament  and  character  of  the  candidate,  but 
most  of  the  successful  co-operative  stores  appear  to  have 
been  built  by  managers  who  had  the  co-operative  motive 
though  without  experience  in  merchandizing.  One  thing 
is  certain  on  the  question  of  manager, — the  board  of  direc- 
tors should  not  be  too  easily  satisfied. 

The  next  question  is  how  many  members  are  there  to 
be  had?  In  obtaining  members  the  whole  matter  should 
be  stated  clearly  and  discussed  frankly.  The  g^^  ^lany 
chances  of  success  and  of  failure  should  be  co-operating 
faced.  Obstacles  should  be  hunted  for  and 
anticipated,  and  above  all,  no  highly  colored  representa- 
tions should  be  made  to  induce  people  to  join.  A  disap- 
pointed member  is  a  liability  even  though  he  continues  to 
buy  at  the  store.  It  is  well  where  personal  acquaintance 
makes  it  possible  to  estimate  the  probabilities  of  loyalty 
of  each  member,  for  it  is  loyalty  which  counts.  The  real 
chances  of  success  are  dependent  upon  the  number  of 
members  who  have  an  abiding  faith  in  co-operation  and 
will  live  up  to  it;  who  appreciate  the  value  of  the  broad 
principles  of  co-operation  and  realize  that  they  justify 
perseverance.  Especially  should  the  dependability  of 
members  be  discounted  if  they  join  at  an  enthusiastic 
public  meeting  where  they  may  have  been  swayed  by  the 
excitement  of  the  movement.  Some  writers  beheve  public 
meetings  before  organizing  should  be  avoided  on  this 
account.^ 

Having  secured  tentative  commitments  of  membership 
it  is  then  desirable  to  find  out  by  canvass  or  careful  estimate 
how  much  the  group  will  buy  per  year  in  order  How  much 
to  make  calculations  as  to  the  amount  of^^^^^^^^y^ 
capital  stock  required.  If,  for  instance,  it  is  ascertained 
that  the  average  purchase  per  family  will  be  $400  and  the 
conditions  are  such  that  capital  can  be  turned  eight  times 
a  year,  there  should  be  about  $50  capital  per  family  served. 
That  would  mean  that  a  group  of  200  would  have  a  trade 

»  See  pamphlet,  "Starting  Right,"  Co-operative  League  of  America, 
2  West  13th  St.,  New  York  City. 


178         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

of  $80,000  per  year  and  require  a  capital  stock  of  $10,000. 
The  capital  requirements  will  often  be  much  less  than  one 
dollar  for  each  eight  dollars  of  annual  sales. 

Capital  may  be  divided  into  shares  of  any  amount  de- 
sired. The  usual  size  of  share  in  English  stores  is  five 
Arrangement  dollars.  Some  worldngmen  make  shares  as  low 
of  capital  ^g  one  doUar,  while  the  usual  size  of  shares  in  the 
Northwestern  States,  where  capital  turns  more  slowly,  is  one 
hundred  dollars.  Shares  should  not  be  so  high  as  to  deter 
subscription  but  should  be  high  enough  to  make  the  pur- 
chase of  a  share  constitute  an  expression  of  interest  and 
confidence  in  the  enterprise.  It  is  common  to  permit  mem- 
bers to  pay  for  shares  on  installments,  allowing  them  pur- 
chase dividends  from  the  time  of  subscription  and  first 
payment,  but  not  stock  dividend  nor  voting  privilege  until 
share  is  fully  paid. 

The  rate  of  dividend  upon  the  subscription  is  fixed  at 
the  time  of  starting  the  society.  This  should  be  no  higher 
stock  div-  than  the  prevailing  interest  rate  in  the  com- 
idends  equal  munity.  In  New  England  this  may  be  about 
Ste'^hf^com-  the  common  English  rate  of  five  per  cent,  while 
munity  ^^g   Central   States  would  more   likely   allow 

six,  and  the  states  far  West  a  higher  rate.  One  thing  is 
imperative:  the  rate  should  be  absolutely  limited  and  not 
be  higher  with  increase  of  profits. 

The  mistake  should  not  be  made  of  starting  without 
ample  cash  capital  in  hand.  There  should  be  a  surplus  in 
the  bank  to  meet  emergencies  after  fixtures  and  stock  are 
paid  for.  If  the  capital  cannot  be  raised  at  the  outset,  it 
is  better  to  defer  starting  until  it  can.  To  fail  to  raise 
capital  is  much  better  than  later  to  fail  for  want  of  it. 

In  raising  capital,  as  in  enlisting  tentative  members,  it 
is  unwise  to  hold  out  false  hopes.  The  whole  truth  should 
T^      .+  ^,r,^A  be  set  forth  that  each  member  may  act  in- 

Do    not    hold  r        j-  •    ^ 

out  false  telligently  and  have  no  reason  for  disappomt- 
^°P®^  ment  or  disloyalty.     To  get  people  in  ori  the 

right  basis  is  to  make  for  stability  by  getting  them  in  to 
stay. 


! 


PLANNING   A   CO-OPERATIVE   SOCIETY  1 79 

The  legal  details  of  organizing  are  quite  similar  to  those 
of  organizing  an  ordinary  stock  company.  Some  lawyer 
in,  or  friendly  to  the  group  who  favors  the  Legal  side  of 
movement  will  usually  be  willing  to  assist  orgamzmg 
without  the  regular  fees.  Those  most  active  in  organizing 
should  be  in  possession  of  all  pamphlet  literature  on  the 
subject.  This  can  be  had  for  a  few  cents  from  the  Co- 
operative League  of  America,  2  West  13th  Street,  New 
York  City,  where  free  advice  can  be  had  for  the  asking. 

The  number  of  directors  is  optional  and  will  depend 
upon  various  things  including  the  kind  of  candidates  avail- 
able. A  small  board  of  three  or  five  is  wieldy  Directors 
and  can  act  quickly,  while  a  larger  board  may  serve  to 
hold  the  active  interest  of  more  members  since  a  large 
number  will  come  in  contact  with  a  larger  number  of  mem- 
bers. Women  are  of  course  good  directors:  it  is  wise  to 
have  at  least  part  women  on  the  board. 

The  charter  and  by-laws  ^  should  make  very  clear  the 
fundamental  principles  and  methods,  as  limited  dividends 
on  stock,  one  vote  to  each  member  regardless  of  amount  of 
stock  held,  no  proxies,  no  goods  sold  on  credit,  provision 
for  reserve  and  educational  fund,  division  of  all  surplus  on 
purchases,  and  goods  sold  at  retail  prices.  To  depart  from 
the  more  fundamental  of  these  is  to  abandon  the  Danger  of  de- 
co-operative  idea  and  to  invite  failure.  It  is  better  Ro'^hj^e^'^"™ 
to  put  these  provisions  into  the  fundamental  principles 
laws  of  the  society  to  avoid  any  ambiguity  or  the  necessity 
of  debating  the  points  with  those  would-be  innovators  who 
are  not  informed  upon  Rochdale  principles.  There  are 
two  ways  to  organize  store  companies:  on  the  old  private 
profit  basis,  or  on  the  co-operative  mutual  serv-ice  basis. 
These  plans  are  for  the  latter  and  compromise  is  folly. - 

^  See  Appendix  I. 

*  The  Rochdale  plan  has  been  so  thoroughly  tested  and  approved, 
and  departure  from  it  has  so  often  been  fatal  that  to  try  experiments 
or  let  down  a  little  here  or  there  is  to  begin  wrong.  Methods  and  de- 
tails of  store  work  are  very  proper  subjects  for  invention  and  improve- 
ment, but  the  English  co-operative  organization  should  be  altered  only 


l8o         CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

Directors  may  be  elected  for  one  year,  or  may  be  divided 
into  three  groups,  one-third  of  the  board  to  be  elected  each 
year.  The  more  common  and  probably  preferable  way  is 
to  elect  all  annually,  though  there  is  much  in  favor  of 
holding  over  some  members  of  each  board  to  give  con- 
tinuity to  the  store  policy. 

The  board  has  general  charge  of  the  business,  elects  its 
own  officers  and  its  own  committees.  Auditors,  as  they  are 
to  pass  upon  the  work  of  the  board,  are  elected  by  members. 

It  is  considered  very  wise  policy  in  Great  Britain  to 
have  an  educational  or  propaganda  committee  wholly 
outside  of  and  independent  of  the  directors,  this  to  be 
elected  by  members.  If  the  directors  are  liable  to  neglect 
this  feature  of  the  work  by  reason  of  absorption  in  business 
details  which  is  often  the  case,  the  outside  committee  should 
be  arranged  for.    In  no  case  should  education  be  neglected. 

In  America  directors  and  officers  usually  act  without 
compensation,  except  that  treasurers  may  be  paid  for  ac- 
counting labor  or  secretaries  for  work  outside  the  usual 
duties  of  keeping  records  of  meetings,  sending  notices,  etc., 
for  society  and  directors.  In  Great  Britain  directors  are 
apt  to  get  a  sm^all  fee  for  attending  directors'  meetings. 

The  board  of  directors  employs  the  manager.  In  Eng- 
lish practice  he  may  have  no  vote  in  electmg  directors 
or  in  any  matter  m  which  he  might  be  personally  interested. 
Officers  and  directors  may  not  become  salaried  employees. 

The  payment  of  all  surplus  above  expenses,  interest  on 
stock  and  proper  reserves,  as  dividend  on  purchases  may 
Dividend  on  be  Called  the  comer-stone  of  co-operation.  As 
purchases  ^g  j^^vc  sccn,  the  consumers  thus  ultimately 
obtain  their  supplies  at  origmal  wholesale  prices  with  noth- 
ing added  except  the  expense  of  handling  them.  This  ex- 
pense includes  as  one  item  remuneration  for  the  use  of  the 
capital  required  to  conduct  the  business,  such  reserves  as 
are  necessary  to  make  more  stable  or  effective  the  plant,  and 
after  very  careful  consideration  by  the  best  authorities  on  the  subject. 
Moreover,  to  depart  from  the  fundamental  principles  is  to  make 
affiliation  with  approved  co-operative  societies  impossible. 


PLANNING  A  CO-OPERATIVE   SOCIETY  l8l 

such  education  as  is  needed  to  inspire  the  activity  and  devo- 
tion required  to  insure  rapid  and  steady  flow  of  goods.  The 
items  of  outlay  are  always  open  to  the  member's  inspection, 
consideration  and  discussion  as  he  pays  absolutely  no  profit 
on  the  cost  of  his  goods.  Here  is  a  sharp  difference  between 
genuine  co-operation  and  all  counterfeits.  In  the  latter, 
there  are  always  some  profits  unknown  in  amount. 

Half  rate  purchase  dividends  are  by  many  co-operative 
stores  given  to  those  customers  who  are  not  members.  This 
is  a  question  upon  which  there  is  a  difference  of  purchase  div- 
opinion.    That  policy  should  be  adopted  which  idends  to  non- 

^  ...     1  •  1        V.   '1     i      i     members 

seems  most  hkely  to  msure  and  contribute  to 
the  success  of  the  society.  The  aims  of  co-operation  should 
not  be  selfish,  and  the  benefits  should  be  as  widely  diffused 
as  possible,  but  at  tliis  stage  of  development  the  co-oper- 
ative should  take  that  course  which  would  most  surely  con- 
tribute to  its  success.  If  half  dividends  are  not  given  to 
non-members  the  conditions  of  membership  should  be 
made  easy.  In  any  case,  the  subject  should  be  carefully 
considered  from  all  angles,  except  in  some  states  where  the 
co-operative  laws  require  that  dividends  be  paid  to  cus- 
tomers not  members,  thus  taking  the  matter  largely  out  of 
the  hands  of  the  societies.  Plenty  of  time  should  be  taken 
to  thrash  out  all  these  questions  of  policy  and,  having  de- 
cided, the  aims  of  the  society  should  be  made  plain,  kept 
constantly  before  the  members  and  adhered  to  in  e-ocry  case. 

It  is  well  if  the  chairman  of  the  finance  committee  be  apt 
at  interpretation  of  accounts  so  that  the  run  Keeping 
of  the  business  can  be  made  as  plain  as  possible  ™|^f  *"i"°" 
to  all.    One  of  the  first  principles  should  be  to  touch   with 
keep  members  closely  in  touch  with  the  work  store  finances 
and  progress  of  the  store. 

The  relation  of  the  board  of  directors  and  its  committees 
to  the  management  of  the  store  will  depend  much  upon  the 
kind  and  size  of  the  business  conducted.    If  a  Relations  of 
small  business,  conducted  in  a  simple  manner  board    and 
with   few   or   no   service   features   the   board,  ™^*semen 
through  its  proper  committees,  will  be  close  to  the  details 


1 82         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

and  will,  in  fact,  conduct  the  management.  There  will  be 
little  paid  help  and  work  will  be  done  strictly  under  the 
direction  of  the  chairmen  of  committees.^  On  the  other 
hand,  if  the  business  is  large  and  its  service  to  members  con- 
siderable, the  manager  will  be  selected  with  a  view  to  hold- 
ing him  responsible  for  the  technical  conduct  of  the  busi- 
ness. He  will  report  results  rather  than  details  to  the  board. 
In  the  one  case  the  co-operative  idea  is  more  apt  to  be 
developed  at  the  expense  of  technical  efficiency  where,  as  in 
the  large  store,  the  operation  may  be  developed  to  a  point 
of  high  technical  efficiency  at  the  sacrifice  of  co-operative 
ideals  and  the  co-operative  spirit.  The  ideal  store  will 
promote  both  simultaneously. 

The  aims  of  a  store  should  be  kept  to  the  front  among  the 
membership  in  any  case.  They  are  the  ones  for  which  co- 
operation exists.  When,  in  future,  managers  and  store 
workers  are  so  trained  and  developed  that  they  are  at  once 
skilled  purveyors  of  goods  and  co-operative  idealists,  the 
starting  and  conduct  of  a  co-operative  store  will  be  a  simpler 
matter  than  it  is  to-day. 

But,  in  any  case,  no  matter  how  independent  of  the  board 
the  manager  may  be,  he  will  of  course  be  required  to  adhere 
to  the  fundamental  policy  adopted  by  the  board.  For  in- 
stance, he  will  sell  only  for  cash  and  under  such  other  broad 
rules  as  the  society  may  adopt. 

Directors  will  find  that  many  questions  will  arise  which 
space  forbids  me  even  to  mention  here.  But  if  the  ideals  of 
Working  out  the  movement  are  kept  in  mind  and  the  business 
store  prob-  faithfully  attended  to,  the  work  will  be  interest- 
te^sting  "^'  ing  and  even  the  solution  of  knotty  problems 
task  y^[i\  add  zest  to  the  undertaking.    The  directors 

should  keep  as  closely  in  touch  as  possible  with  other  so- 
cieties and  ere  long  we  may  reasonably  hope  there  will  be 
regular  meetings  in  different  parts  of  the  country  where  co- 
operators  can  exchange  experiences  and  opinions  and  help 
each  other  in  many  ways. 

1  Send  to  the  Co-operative  League  of  America,  and  to  OflSce  of 
Markets,  Washington,  D.  C,  for  booklets. 


I 


CHAPTER  XVI 
STARTING  AND  RUNNING  A  STORE 

"What  is  needed  is  the  application  to  distribution  of  science  and 
research  as  these  methods  are  now  apphed  to  production." — P.  H. 
Nystrom,  Ph.  D. 

The  purpose  of  co-operative  buying  must  be  kept  con- 
stantly in  mind  in  connection  with  making  the  arrangements 
for  the  starting  and  running  of  the  store.  This  g^^^g  purpose 
purpose  is  not  to  make  profits,  but  as  a  club  to  to  be  kept  in 
be  thoroughly  helpful  to  members  in  connection  °"° 
with  supplying  their  own  material  wants.  The  store  should 
aim  (i)  to  give  all  possible  aid  in  wise  selection,  (2)  to  give 
positive  assurance  as  to  quality  and  measure,  (3)  to  furnish 
goods  at  the  lowest  possible  cost,  and  (4)  to  see  that  the 
production  and  distribution  of  the  commodities  are  carried 
on  in  a  way  not  hurtful,  but  rather  helpful  to  the  people 
connected  with  the  work. 

The  carrying  out  of  the  co-operative  idea  assumes  that 
the  management  will  sustain  professional  rather  than  com- 
mercial relations  with  the  members  of  the  society.  In 
giving  information  and  advice  the  management  will  take 
the  attitude  of  the  honest  engineer,  architect  or  physician. 

Will  this  policy  win  out  beside  sharp  competition?  It  is 
the  very  basis  of  the  success  of  mutual  serv'ice  purveying, 
and  trouble  should  only  arise  where  the  man-  Danger  of 
agement  departs  from  it  by  compromising  with  compromises 
competitive  methods  and  so  fails  to  win  the  utter  confidence 
of  the  consumer.  Sharp  methods  are  not  only  out  of  place 
in  a  co-operative  store,  they  cannot  win  there.  The  co- 
operative store  has  not  the  means  to  succeed  that  way. 
All  the  arrangements  must  be  made  with  this  larger  service 
in  mind:  the  location,  size  and  kind  of  store,  the  interior 
arrangement  and  fittings,  the  buying  and  handling,  selling 


184         CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

and  accounting,  must  contribute  to  this  ideal  of  final  service. 
When  this  is  so  done  as  to  secure  the  recognition  and  con- 
fidence of  members,  the  battle  is  half  won. 

In  choosing  a  location  for  a  store  the  considerations  are 
convenience  to  members  and  conspicuousness  to  attract 
Location  of  new  members  and  non-member  trade.  If  local 
store  conditions  are  such  that  no  non-member  trade 

of  consequence  can  be  expected,  it  may  be  best  to  take  a 
location  on  an  inexpensive  street.  This  especially  if  new 
members  are  more  likely  to  be  attracted  through  present 
members  than  through  dropping  into  the  store. 

A  small  society  may  sometimes  find  a  room  connected 
with  some  club  of  similar  mutual  aims,  where  rent  may  be 
very  nominal.  But  it  should  be  borne  in  mind  that  at  least 
a  comfortable  room,  with  suitable  surroundings  will  make 
for  success. 

A  co-operative  society  is  not  usually  justified  in  expect- 
ing much  trade  from  outsiders.  For  this  reason  a  society 
would  do  well  to  keep  its  rent  down  to  one  or  two  per  cent 
of  its  volume  of  trade  instead  of  paying  perhaps  twice  that 
percentage  for  a  prominent  comer.  It  is  usually  better  to 
put  cost  into  hospitality  so  that  when  a  customer  does  call 
he  is  pleased,  rather  than  to  put  it  into  rent  to  make  the 
store  conspicuous.  When  in  doubt  it  is  better  to  err  upon 
the  side  of  economy.  The  profit  store  takes  the  expensive 
site  because  it  advertises  the  business.  The  co-operative 
store  should  depend  upon  other  influences,  so  far  at  least 
as  its  own  membership  is  concerned. 

As  to  size  of  store,  shape  and  arrangement,  again  my 
suggestions  can  be  only  very  general  since  circumstances 
vary  so  widely.  The  main  thing  is  that  every  item  under 
consideration  should  be  judged  by  its  earning  power.  If, 
for  instance,  an  expenditure  of  one  per  cent  in  size  of  store, 
adaptation  or  convenience  will  save  two  per  cent  in  operat- 
uitimate  ^S  expenses,  then  there  should  be  no  doubt 
economy  to  about  incurring  the  one  per  cent.  Or  if  the 
e  consi  ere  jg^j-gg^  room  will  contribute  enough  in  looks  and 
dignity  to  promote  trade  or  membership  to  justify  the 


STARTING  AND   RUNNING  A   STORE  1 85 

extra  cost,  then  it  is  probably  wise.  That  is,  intangi- 
ble and  remoter  advantages  may  wisely  influence  a  de- 
cision. 

In  arranging  the  store  the  first  thing  is  so  to  display 
goods  as  to  enable  the  buyer  to  decide  quickly.  Goods 
should  be  so  placed  as  easily  to  strike  the  eye,  and  every- 
thing possible  should  bear  a  legible  price  mark.  When  oc- 
casion requires,  goods  should  have  placards  giving  informa- 
tion of  interest  to  consumers.  For  instance,  eggs  might 
be  marked  to  show  how  much  they  weigh  per  dozen,  how 
old  they  are,  etc.  Every  item  should  be  given  which  will 
expedite  selection  or  make  buying  more  easy  and  satisfac- 
tory. 

The  next  point  is  convenience  of  handling.  Advertising 
and  salesmanship,  treated  elsewhere,  and  convenience  of 
handling  may  well  make  a  very  considerable  convenience 
difference  in  the  cost  of  doing  business.  Here  °^  handUng 
is  where  co-operation  should  prompt  invention  and  experi- 
ment as  to  new  ways  of  doing  business.  A  chain  store 
promoter  in  the  south  has  started  some  stores  in  which 
every  customer  goes  in  and  helps  himself,  paying  the 
cashier  when  he  leaves  the  store.  By  this  method  he  claims 
that  the  total  expense  of  each  store  is  brought  down  to 
below  four  per  cent.  It  is  quite  possible  that  some  modifica- 
tion of  this  help-yoursclf  plan  may  be  adapted  to  a  co- 
operative enterprise.  In  these  "grocertarias,"  quite  a 
number  of  which  are  in  operation  in  different  parts  of  the 
country,  all  goods  are  put  up  in  packages  so  that  all  the 
customer  has  to  do  is  to  put  a  package  of  each  thing  wanted 
into  a  basket,  check  it  up  at  the  cashier's  desk,  put  the 
packages  into  a  paper  bag,  or  buy  the  basket  to  carry  home. 
In  any  case,  the  amount  of  walking  and  time  necessary 
to  put  up  an  order  should  be  reduced  to  the  lowest  point 
in  the  interest  of  economy. 

In  the  matter  of  fittings  the  same  rigid  economy  should 
pre\'ail,  but  economy  means  spending  money  when  the 
expenditure  is  profitable.  I  have  pointed  out  that  one 
advantage  of  co-operative  buying  is  to  save  bother  and 


1 86         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

worry,  but  that  means  that  machinery  must  first  be  so 
devised  and  organized  as  to  be  automatic.  So  the  amount 
Necessity  of  °^  thought  put  into  the  planning  and  arranging 
careful  plan-  of  a  store  will  determine  how  much  thought 
"^^  will  be  saved  by  it  later.    The  hardest  writing 

makes  the  easiest  reading. 

The  next  question  is  buying,  and  perhaps  this  is  the 
Buying  most  dif&cult  part  of  successful  store  manage- 

ment. 

To  begin  with,  there  is  the  question  of  policy  as  to  what 
to  buy,  whether  packaged,  branded  goods  or  bulk  goods, 
and  the  question  is  so  important  that  I  have  discussed  it 
in  a  chapter  devoted  to  that  subject.  But  whether  branded 
goods  are  mainly  handled  or  not,  it  is  the  business  of  the 
buyer  to  know  the  intrinsic  qualities  of  everything  he 
handles,  even  though  it  bears  a  well-known  trade-mark. 
It  is  no  small  task  to  know  and  keep  posted  on  the  quality 
and  values  of  hundreds  of  articles.  This  is  more  important 
in  a  co-operative  store  than  in  a  profit  store  for,  as  already 
stated,  the  aim  of  the  co-operative  is  to  enable  the  con- 
sumer to  get  the  really  best  and  not  merely  that  which 
may  be  most  widely  advertised,  and  also  to  get  it  at  the 
lowest  possible  cost.  Only  judgment  of  intrinsic  values 
will  enable  the  manager  to  serve  this  end. 

How  much  to  buy;  how  to  care  for  and  handle  goods  in 
stock  to  avoid  deterioration  or  waste,  are  also  important 
questions.  How  shall  we  keep  account  of  goods  in  stock 
and  amount  of  sales,  so  as  to  know  when  a  new  supply 
will  be  needed?  All  these  things  should  be  done  in  the 
simplest,  least  expensive,  and  most  automatic  ways. 

Where  is  it  best  to  buy?  It  is  exceedingly  easy  for  a 
buyer  to  move  in  the  direction  of  least  resistance  and  most 
persuasion  and  buy  through  regular  channels  of  the  travel- 
ling salesmen  who  call.  The  jobbing  business  is  based  upon 
the  assumption  that  the  average  dealer's  inertia  is  such 
that  he  will  want  to  be  prodded  and  solicited.  That  he 
likes  to  be  wooed  and  catered  to,  that  it  makes  him  feel 
important  to  be  sought  after.    He  often  makes  the  traveller 


STARTING  AND   RUNNING  A   STORE  187 

wait  and  treats  him  with  scant  courtesy.  This  is  all  typical 
of  the  present  system  of  distributing  goods.  The  manu- 
facturer solicits  and  kowtows  to  the  broker,  the  broker  to 
the  wholesaler,  the  wholesaler  to  the  retailer,  the  retailer 
to  the  consumer,  and  the  consumer  pays  the  whole  bill. 
The  drummer  gets  around  one-third  the  gross  profit  which 
his  employer  gets  for  handling  goods:  that  is,  a  wholesale 
grocer  who  gets  twelve  per  cent  gross  profit  pays  his  travel- 
ling salesman  about  four  per  cent.  It  is  not  easy  for  the 
retailer,  co-operative  or  otherwise,  to  avoid  Not  easy  to 
paying  the  commission  to  the  solicitor,  but  a  [^g' whK'"^ 
way  should  be  found  to  avoid  most  of  it.  If  saier 
the  retailer  has  sufficient  foresight  and  finds  and  goes  to 
the  right  wholesaler,  he  is  likely  to  get  around  the  larger 
part  of  the  charge. 

But  why  not  also  skip  the  wholesaler  and  take  to  him- 
self the  profit  which  the  wholesaler  exacts?  This  is  a 
natural  question  which  is  always  asked  when  one  first  ap- 
proaches the  subject  of  distribution  of  commodities.  The 
answer  is  not  simple,  but  in  a  general  way  may  be  made  as 
follows:  The  original  producer,  be  he  grower  or  manufac- 
turer, especially  the  former,  is  not  in  a  position  always  to 
fill  orders  promptly  and  satisfactorily,  and  to  sell  in  the 
relatively  small  quantities  in  which  the  retailer  buys. 
And,  as  before  stated,  the  usual  plan  is  to  push  the  goods 
by  soliciting  orders.  The  producer  of  a  single  article  can 
rarely  aflford  to  send  a  salesman  to  \dsit  and  solicit  all  the 
small  dealers.  Then  again,  there  is  the  question  of  credit 
of  the  local  merchant,  upon  which  the  pro-  Buying  of 
ducer  of  a  single  article  is  not  in  a  position  to  original 
keep  well  posted.  The  dealer  who  tries  to  buy 
of  the  farmer,  for  instance,  has  many  unsatisfactory  ex- 
periences. The  eggs  or  maple  syrup  he  sends  for  may 
not  be  up  to  the  mark  in  quality,  and  it  may  be  difficult 
to  reject  unsatisfactory  goods  and  get  another  supply 
promptly.  The  farmer  is  rare  who  complies  with  the  prin- 
cipal rules  and  usages  of  the  best  jobbers.  These  and 
many  other  things  make  it  difficult  for  the  co-operative 


l88         CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

buyers  to  buy  direct  of  original  producers.  Moreover, 
many  of  the  manufacturers  and  some  of  the  farmers' 
shipping  associations  refuse  to  sell  to  retailers  on  the  prin- 
ciple that  they  (the  producers)  need  the  services  of  the 
wholesalers,  and  to  get  the  best  of  such  services  they  are 
obhged  to  avoid  selling  to  those  who  would  otherwise  buy 
of  the  wholesaler. 

But  in  spite  of  all  these  obstacles  the  co-operative  store 
should  study  to  buy  from  original  sources  as  far  as  possible 
and  should  keep  at  it  until  every  resource  is  exhausted. 
There  are  undoubtedly  articles  which  it  is  a  physical  im- 
possibiUty  to  obtain  from  original  producers,  but  there 
are  many  others  which,  with  perseverance,  may  be  obtained 
and  which  will  prove  a  real  boon  to  consumers  and  to  the 
store.  It  is  better  to  take  much  extra  trouble  and  incur 
risk  as  to  quality  and  promptness  of  supply  in  order  to 
establish  these  connections  and  devise  methods  which  will 
ultimately  mean  a  shorter  and  cheaper  route  from  pro- 
ducer to  consumer,  with  consequently  fresher  and  better 
guaranteed  goods. 

The  pricing  of  goods  is  a  subject  which  requires  much 
judgment  and  tact.  In  one  sense  it  makes  no  difference 
Pricing  of  how  much  co-opcrative  members  are  charged 
goods  fQj.  their  goods  when  they  buy,  since  all  the 

surplus  beyond  the  wholesale  cost  and  expense  of  handling 
is  returned  to  the  consumer  in  the  form  of  dividends  on 
purchases.  On  the  other  hand,  it  is  desirable  to  require 
members  to  leave  as  little  surplus  as  possible  on  deposit  at 
the  store  to  be  returned  later  for  it  will  come  to  pass  even 
in  a  co-operative  store  that  the  lower  prices  are,  the  larger 
will  be  the  volume  of  trade  and  hence  the  lower  the  rate 
of  expense  for  handling.  Then  again,  as  stated  elsewhere, 
it  is  desirable  to  have  prices  about  on  a  level  with  other 
stores  of  equal  grade,  in  order  that  the  rate  of  purchase 
dividend  may  indicate  the  direct  cost  saving  advantage  of 
co-operative  buying.  A  keen  study  of  local  conditions  will 
be  necessary  to  enable  managers  to  act  wisely  in  this  matter. 

The  hiring  and  management  of  help  are  discussed  else- 


STARTING  AND   RUNNING  A   STORE  189 

where.    Also  the  delivery  of  goods  has  a  chapter  to  which 
the  reader  is  referred. 

The  necessity  of  proper  cost  accounting  and  bookkeep- 
ing generally  is  too  obvious  to  require  much  comment. 
The  manager  and  his  subordinates  cannot  too  i^  ^^^j^g  ^j 
early  get  the  habit  of  thinking  about  all  parts  costs  and 
of  the  business  in  terms  of  costs  and  earnings,  ^"'^"'s^ 
Things  are  often  done  because  others  do  them  or  because 
it  is  a  habit  to  do  them,  when  if  the  earnings  and  costs  were 
compared,  they  would  be  cut  out  at  once.  On  the  other 
hand,  expenditures  are  often  thought  to  be  extravagant 
which,  when  earnings  are  considered,  are  found  to  be 
profitable.  Efficiency  and  economy  do  not  consist  merely 
in  refraining  from  expenditure. 

The  nature  of  the  case  and  the  scope  and  limits  of  this 
book  make  impossible  more  than  a  brief  general  discussion 
of  these  practical  matters.  Those  close  to  the  Literature  on 
management,  whether  as  directors,  managers  or  store  man- 
store  workers  should  read  the  books  and  papers  *s®™^° 
devoted  to  these  subjects,  utilizing  such  suggestions  and 
instructions  as  are  adapted  to  co-operative  distribution  in 
general  and  to  their  type  of  enterprise  in  particular.^ 

^  A  System  of  Accotmts  for  Retail  Merchants,  is  a  pamphlet  issued 
by  the  Federal  Trade  Commission,  Washington,  and  will  be  sent  free. 
Harvard  System  of  Accounts  for  Retail  Grocers,  Harvard  Graduate 
School  of  Business  Administration,  Cambridge,  Mass.,  should  be 
studied. 


CHAPTER  XVII 
THE  DELIVERY  PROBLEM 

The  expense  of  delivering  goods  from  the  store  to  con- 
sumers is  the  largest  single  item  in  the  cost  of  retailing 
except  salaries  of  sales  people.  The  cost  varies  greatly, 
ranging  all  the  way  from  two  per  cent  of  sales  to  fifteen  per 
cent  or  more,  depending  upon  the  character  of  the  commu- 
nity served,  the  size  of  the  business,  and  various  other  con- 
ditions.^ 

Housewives  are  often  advised  to  carry  home  all  their  pur- 
chases. Some  reformers  go  so  far  as  to  advise  that  all 
Movement  delivery  be  done  away  with.  So-called  "econ- 
toward  no  omy"  stores  which  dehver  no  goods  and  have 
^"^'^  no  telephone,  are  multiplying  rapidly  at  the 
present  time.  Such  stores  appear  to  prove  that  goods  can 
be  sold  at  lower  prices  where  no  delivery  is  given  than 
where  free  delivery  for  all  sales  is  offered,  in  spite  of  the 
loss  of  such  customers  as  insist  upon  dehvery.  But  to 
dispense  with  dehvery  when  it  is  needed  would  seem  to 
be  a  step  backward.  It  is  required  in  many  cases  and 
is  wholly  desirable.  Also,  ordering  by  telephone  un- 
doubtedly has  many  advantages  that  cannot  be  offset  by 
its  evils. 

To  dispense  with  telephones  and  delivery,  then,  for  a 

1  A  recent  investigation  made  by  the  U.  S.  Census  Bureau  showed 
that  the  cost  of  delivery  in  Washington  ranged  from  19.8  per  cent  of 
the  retail  price  to  26.1  per  cent  on  bakery  products;  dairy  products, 
1 1.3  to  13  percent;  groceries  and  meats,  2  to  8.2  percent — average,  4.4 
per  cent;  ice  cream,  10.8  to  40  per  cent;  coal,  8.1  to  19.3  per  cent;  ice, 
45.6  per  cent;  food  products,  average,  7.4  per  cent;  laundry,  10.3  to 
20.3  per  cent;  and  miscellaneous,  1.7  to  20  per  cent,  average  6.2  per 
cent. 


THE   DELIVERY  PROBLEM  I9I 

store  which  undertakes  to  give  anything  like  all  round 
service  to  its  community  is  out  of  the  question. 

The  complaint  is  often  made  that  customers  frequently 
ask  to  have  small  purchases  sent,  in  fact  that  they  order  in 
unreasonably  small  quantities  requiring  an  excessive  num- 
ber of  calls.  But  is  this  not  as  much  a  fault  of  the  "free" 
delivery  system  as  of  the  customer? 

The  pretence  of  giving  something  for  nothing  is  one  of 
the  characteristics  of  a  distributive  system  which  is  not 
frank  with  the  consumer.  "Free"  delivery  is  merely 
one  of  the  free  or  below-cost  things  which  go  with  "bar- 
gains," trading  stamps  and  premiums,  and  other  indirect 
practices. 

There  are  many  evils  inherent  in  so-called  free  delivery. 
One  is  that  the  expense  of  the  service  is  concealed  from  those 
who  have  it  to  pay  for.  Concealed  charges  are  Evils  of  "  free 
very  apt  to  be  unfair  charges.  The  assessing  of  deUvery  " 
expenses  for  delivery  is  no  exception  to  the  rule.  There  is 
no  justification  for  charging  the  expense  of  delivery  to  those 
who  do  not  have  the  delivery  but  carry  their  goods  away 
with  them.  The  level  price  plan  by  which  the  customer  who 
asks  for  frequent  small  deliveries  and  the  customer  who  has 
no  delivery  pay  the  same  price  is  manifestly  unjust.  Under 
"free"  delivery  a  customer  has  no  incentive  to  order  in 
large  quantities  and  carry  small  purchases  away  to  save  too 
many  calls  of  the  wagon.  This  and  the  ever  convenient 
telephone  encourage  frequent  small  orders  which  the  cus- 
tomer generally  wants  sent  "right  away."  The  great  cause 
of  unnecessary  expense  is  the  fact  that  customers,  deluded 
by  the  word  "free,"  make  use  of  dehvery  much  oftener  than 
is  necessary.  A  Httle  forethought  in  ordering  ahead  and 
the  carrying  of  small  purchases  would  probably  reduce  the 
delivery  of  a  full  "service"  store  by  one-half.  But  the  cus- 
tomer has  no  incentive  to  exercise  this  care.  Her  goods 
will  apparently  cost  the  same  if  she  does  cause  the  store  an 
expense  of  ten  per  cent  to  deliver  them.  Considered  from 
any  standpoint  you  will,  the  "free  delivery"  plan  is  an 
«vil  idea. 


192         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

There  is  an  easy  and  straightforward  remedy  for  the 
The  remedy:  trouble,  a  remedy  which  admirably  fits  the 
charge-for-  co-operative  idea  and  spirit:  Why  not  make 
delivery  plan   ^  charge  foY  delivery? 

This  plan  has  been  in  operation  for  some  years  at  the 
Montclair  (New  Jersey)  Co-operative  Store.  All  prices  are 
based  upon  goods  delivered  at  the  store,  not  at  the  residence  oj 
the  buyer.  A  uniform  charge  of  seven  cents  is  made  for  the 
dehvery  of  any  bill  of  goods  anywhere  within  the  regular 
dehvery  territory  of  the  store.  The  charge  is  for  each  call 
Reasons  for  ^^  ^he  deliveryman,  regardless  of  the  amount 
uniform  of  the  Order, — this,  for  several  reasons.     First, 

charge  ^^^  ^^^^  expense  is  in  stopping  and  leaving  the 

goods,  especially  when  goods  are  collected  for  on  delivery. 
Again,  the  uniform  charge  for  small  or  large  orders  tends  to 
increase  the  size  of  orders  and,  since  larger  quantities  cost 
a  smaller  percentage  to  handle,  reduces  the  cost  of  store 
work.  Distance  is  disregarded  in  fixing  the  amount  of 
charge  because  what  counts  most  is  not  distance  from  the 
store,  but  distance  from  the  last  preceding  call.  And, 
finally,  the  uniform  charge  is  in  the  interest  of  simpHcity. 
The  seven  cents  does  not  quite  cover  the  expense  per  call, 
but  was  adopted  with  the  hope  that  when,  with  the  growth 
of  business,  calls  became  frequent  enough,  each  call  could  be 
made  at  that  average  cost.^    When  this  plan  was  adopted 

1  At  a  hearing  on  express  rates  a  New  York  department  store  gave 
its  cost  of  delivery  per  call  in  different  sections  as  follows: 

It  costs  7V7  cents  to  deliver  each  package  in  Manhattan  from  the 
Battery  to  135th  Street.  The  cost  in  Brooklyn,  including  deliveries 
in  Coney  Island,  Flatbush,  Ridgewood,  and  Greenpoint  is  9K  cents. 
In  Jersey  City,  including  Hoboken  and  Weehawken,  it  is  loVs  cents. 
In  the  Bronx  zone,  which  includes  Yonkers,  Mount  Vernon,  New 
Rochelle,  Tuckahoe  and  Mamaroneck,  the  cost  is  6X  cents;  Port 
Chester,  including  the  district  from  Larchmont  to  Stamford,  Conn., 
and  White  Plains,  16V3  cents;  Tarrytown,  including  from  Hastings  to 
that  town,  11  cents;  Staten  Island,  including  Bayonne,  11  cents;  the 
Long  Island  district  from  Long  Island  City  to  Bayside  and  Queens, 
12K  cents;  Hackensack,  including  Homestead,  Closter,  Ridgewood 


THE   DELIVERY  PROBLEM      '  I93 

by  the  Montclair  store  it  was  quite  generally  opposed.  Dire 
results  were  predicted.  But  by  constantly  keeping  the 
advantages  before  the  people,  objection  has  practically  dis- 
appeared and  the  plan  is  working  well.  The  justice  of  the 
principle  is  generally  admitted.  People  who  have  goods 
delivered  pay  for  it.  Those  who  do  not  have  this  service 
enjoy  the  saving.  The  housewife  who  so  systematizes  her 
ordering  as  to  have  only  two  or  three  deliveries  Charge  for 
a  week  pays  accordingly.  On  the  other  hand,  couSs  *s°"s- 
she  who  has  two  calls  a  day  also  pays  accord-  tematic  order- 
ingly.  The  plan  tends  to  encourage  larger  and  economy 
less  frequent  and  more  systematic  ordering,  correspondingly 
reducing  the  cost  not  only  of  delivery  service,  but  also  of 
work  in  the  store.  The  principle  is  just  and  tends  toward 
a  degree  of  economy  which  will  do  much  to  solve  the  delivery 
problem.  Its  equity  and  mutuality  are  calculated  to  com- 
mend it  to  co-operators.^ 

Another  nde  practiced  by  this  store  and  by  some  others 
is  to  Hmit  the  number  of  trips  over  each  route.  The  hit- 
or-miss  way  of  delivering  is  to  send  wagons  out  whenever 
the  pressure  of  some  customer  or  the  number  of  orders  put 

and  Paterson,  12  X  cents,  and  in  Newark,  Passaic,  Morristovvn,  Plain- 
field  and  Elizabeth,  8V5  cents. 

1  When  the  INIontclair  store  was  first  started  a  plan  was  adopted  and 
followed  three  years  which  av'oided  adding  the  charge  for  delivery  to 
the  bill.  A  discount  of  five  per  cent  was  made  on  all  members'  pur- 
chases payable  at  the  end  of  each  quarter,  unless  goods  were  delivered. 
When  goods  were  delivered  a  charge  of  ten  cents  was  made  for  each 
call  of  the  wagon.  But  this  charge  did  not  go  on  the  bill  but  was  de- 
ducted from  the  delivery  bonus  discount  at  the  end  of  the  quarter. 
Thus,  a  member  buying  Sioo  worth  of  goods  during  the  quarter  and 
having  had,  say,  fifteen  deliveries  during  the  same  period,  at  the  end 
of  the  quarter  this  member  would  receive  a  check  for  five  per  cent  of 
$100  or  $5.00  less  $1.50  or  S3. 50.  The  advantage  of  this  bonus  deUvery 
plan  is  that  no  specific  charge  on  the  bill  needs  to  be  e.xplained.  Its 
disadvantages  are  that  lowest  initial  prices  cannot  be  made  at  the 
store  to  attract  trade  and  the  system  requires  considerable  e.xtra 
bookkeeping.  The  INIontclair  store  very  much  prefers  the  flat  charge 
plan  now  followed. 


194         CO-OPERATION  THE   HOPE   OF   THE   CONSUMER 

up  seem  to  make  it  expedient.  Hence,  the  same  routes 
may  be  covered  several  times  a  day.  The  practice  of  the 
Montclair  store  is  to  send  delivery  cars  out  only  twice  a 
day,  at  9.30  for  luncheon  orders,  and  at  2.30  for  dinner 
orders.^  One  remote  route  is  covered  only  once  daily.  If 
extra  deliveries  are  wanted  by  a  customer  they  are  made  if  a 
rig  is  free,  at  a  charge  of  ten  cents  extra.  The  enforcement 
of  schedule  requires  a  clear  understanding  with  customers 
In  harmony  and  firmness  on  the  part  of  the  management. 
rrative°'pnn-  '^^^^  ^^^^  ^^  ^  thing  SO  manifestly  right  that  when 
cipies  co-operators  understand  it  they  can  hardly  fail 

to  give  their  sympathetic  help.  Here  let  us  say  that  co- 
operation means  working  together,  in  this  and  in  other  mer- 
chandizing reforms.  To  this  end  members  must  be  kept 
constantly  in  touch  with  the  rules,  aims  of  the  management, 
and  so  far  as  is  possible,  the  reasons  for  all  that  is  done. 
There  is  need  for  constant  education  and  every  possible 
manifestation  of  mutuality  of  interest. 

In  quite  a  number  of  towns  in  the  central  west  the  plan 
has  been  adopted  of  having  a  single  delivery  equipment 
Joint  delivery  to  do  the  delivering  for  a  number  or  all  of  the 
merchants.  In  some  cases  the  delivery  outfits  are  owned 
by  an  individual  who  charges  each  merchant  so  much  per 
week  or  month.  In  other  cases,  the  merchants  have 
joined  in  one  company,  each  putting  his  delivery  equip- 
ment into  the  company  and  receiving  sufficient  stock  in 
the  new  company  to  compensate  him.  There  would  seem 
to  be  no  better  way  to  organize  this  business  than  for  the 
merchants  to  form  a  regular  co-operative  company  operat- 
ing upon  the  Rochdale  plan.  In  that  case  each  merchant 
would  pay  enough  for  service  so  that  the  work  would  be 
safely  financed,  the  surplus  being  paid  back  to  him  on  the 
basis  of  patronage.  There  are  no  reliable  reports  from 
these  joint  delivery  undertakings,  but  some  of  them  ap- 
pear to  be  giving  service  superior  to  that  given  by  indi- 

1  There  is  an  extra  delivery  early  Saturday  morning  to  get  out 
Saturday  goods  ordered  Friday.  Placing  of  week-end  orders  on  Friday 
is  a  custom  which  is  growing,  and  is  greatly  to  be  commended. 


THE   DELIVERY  PROBLEM  1 95 

vidual  merchants,  and  also  saving  a  considerable  part  of 
the  expense,  some  say  forty  to  fifty  per  cent.  There  is  no 
doubt  that  plans  of  this  sort  will  ultimately  be  worked  out 
to  the  great  advantage  of  either  merchants  or  consumers. 
Of  course,  all  the  sa\dngs  would  go  to  consumers  in  the  case 
of  co-operative  stores.  The  principal  obstacles  to  such  a 
plan,  under  the  present  system,  seem  to  be  jealousy  be- 
tween merchants  and  the  desire  to  retain  such  individual 
advertising  as  a  firm's  wagons  on  the  street  give.^ 

Quick,  satisfactory  and  economical  delivery  is  not  an 
easy  problem,  and  not  the  least  difiicult  of  its  questions 
is  what  kind  of  vehicles  to  employ.  The  wise  Delivery 
manager  will  not  take  anything  for  granted  vehicles 
in  this  matter.  Close  figuring  is  necessary  for  good  results. 
Of  course,  very  much  depends  upon  local  conditions.  The 
bicycle  and  tricycle  are  much  used  in  England,  and  on 
good  level  roads  for  near-by  calls  are  undoubtedly  desirable. 
Tests  were  recently  made  by  engineers  who  reported  that 
under  average  conditions  horse-drawn  wagons  are  most 
economical  for  half  a  mile  around  the  store,  that  for  the 
next  mile  in  radius  electric  vehicles  are  cheapest,  and  for 
the  outer  zone  gasoline  cars  do  the  most  efiicient  work. 

Transportation  engineers  are  sometimes  employed  to 
study  a  store's  needs  and  make  recommendations.  Tests 
and  guarantees  are  necessary.  No  guess-work  or  hearsay 
should  be  relied  upon. 

Another  question  which  requires  careful  study  is  the 
laying  out  of  routes  to  make  the  most  calls  at  the  least  cost 
and  do  it  on  time.  And  this  question  will  not  stay  settled 
but  requires  frequent  re-examination  with  growing  and 
changing  trade.  It  is  well  to  be  amply  supplied  with  maps 
showing  routes  and  territory,  thumb  tacks  to  show  regular 
calling  places  and  all  other  helps  to  system  and  economy. 

In  making  calls  there  are  various  things  to  cause  delay, 

*  Leaders  can  doubtless  get  in  touch  with  recent  union  or  co- 
operative delivery  undertakings  and  those  most  successful  by  in- 
quiring of  the  editor  of  Syslctn.  Chicago,  which  is  constantly  making 
surveys  and  investigations  of  such  matters. 


196         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

some  of  which  are  not  within  the  control  of  the  delivery- 
Quick  calls  man.  But  the  delays  caused  by  the  customer 
can  be  largely  eliminated  by  the  practice  of  the  right  kind 
of  tact.  If,  without  rudeness,  the  deliveryman  shows  that 
time  is  valuable,  he  can  do  much  to  expedite  his  work. 

Collecting  on  deHvery  often  adds  to  the  time  necessary 
at  each  house.  It  may  seem  best  to  hold  out  special  en- 
couragement to  members  to  have  deposits  at  the  store. 
But  these  are  things  which  must  be  studied  with  reference 
to  local  conditions  and  the  extent  of  education  of  members. 
Successful  co-operation  requires  a  degree  of  intimacy 
between  members  and  management  which  is  comparatively 
new  to  us  in  this  country.  Some  of  the  care  of  which  the 
housewife  has  been  relieved  in  the  kitchen  by  the  canner 
and  the  food  manufacturer  may  well  be  exercised  over  the 
agency  which  brings  her  foods  ready  for  use. 

It  cannot  be  too  strongly  emphasized  that  the  delivery 
rig  and  the  deliveryman  are  the  outside  representatives 
Appearance  of  the  store  and  visible  to  everybody.  Their 
and  courtesy  appearance  should  be  such  as  to  create  the  right 
impression.  These  will  dehvcr  a  message  to  the  public; 
it  is  with  the  management  to  decide  whether  the  message 
shall  be  advantageous  to  the  movement  or  otherwise. 
The  courtesy,  kindness  and  intelligent  service  of  drivers 
will  count  for  or  against  the  movement  even  more.  The 
employee  of  a  co-operative  store  is  not,  however,  called 
upon  to  adopt  a  truculent  or  obsequious  attitude.  His 
position,  in  keeping  with  the  spirit  of  co-operation,  is  one 
of  dignity,  self-respect,  with  all-round  helpfulness. 

It  need  hardly  be  said  that  account  of  the  cost  of  delivery 
service,  in  great  detail  as  well  as  in  totals,  should  be  care- 
fully kept. 


CHAPTER  XVIII 
HANDLING  TRADE-MARKED  GOODS 

More  and  more  manufacturers  and  other  producers  are 
marketing  their  products  by  the  advertising  method. 
The  rapid  development  of  this  plan  of  distribution  is  raising 
some  knotty  questions  for  both  merchants  and  consumers, 
and  presents  problems  to  the  co-operator  which  require 
careful  consideration. 

Under  the  new  plan  a  manufacturer  of,  say,  oatmeal, 
instead  of  selling  it  to  merchants  by  the  barrel,  in  bulk, 
to  be  weighed  out  for  the  customer,  now  puts  Evolution 
his  product  up  in  packages  and  prints  a  fancy  of  packaged 
trade-mark  on  the  package.  He  does  this  so  ^°° 
that  consumers  who  like  his  oatmeal  may  be  able  to  call 
for  it  and  get  it  repeatedly,  thus  increasing  the  sale  of  his 
goods  provided  they  are  of  such  quality  as  meet  the  con- 
sumer's requirements.  He  puts  up  a  good  article  with 
care  so  that  more  people  will  come  back  for  it.^  Then 
arises  the  question  of  how  he  can  get  more  people  to  call 
for  it  the  first  time.  It  is  found  that  this  can  be  done  by 
advertising.  By  reason  of  the  demand  created  by  adver- 
tising he  is  able  to  put  in  automatic  weighing  and  packaging 
machinery  and  other  improved  facilities.  This  reduces 
very  materially  the  cost  of  production.    The  stimulation 

*  When  Thomas  Jefiferson  was  Secretary  of  State,  Samuel  Brcck,  a 
sail-cloth  maker  of  Boston,  petitioned  Congress  to  be  allowed  to  reg- 
ister his  trade-mark.  The  matter  was  referred  to  Jefferson,  who  re- 
ported favorably,  and  gave  his  opinion  that  it  would  "Contribute  to 
fidelity  in  the  execution  of  manufacturers  to  secure  to  every  manufac- 
ture an  exclusive  right  to  some  mark  on  its  wares  proper  to  itself." — 
Quoted  by  John  Lee  Alahin,  in  Printers'  Ink. 


198         CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

of  demand  also  makes  possible  the  reduction  of  other  sell- 
ing expenses  like  travelling  salesmen.  Thus  by  making  a 
good  article,  trade-marking  it,  and  pushing  it  through  ad- 
vertising and  skillful  salesmanship,  many  manufacturers 
have  built  up  great  and  profitable  businesses.^ 

Now  a  question  of  policy  comes  to  him.  He  is  at  the 
parting  of  the  ways.  Shall  he  reduce  the  price  to  the  con- 
Shaii  producer  sumer,  or  shall  he  presume  upon  the  reputa- 
profits  ^th  ^^°^  ^^  ^^^  product  to  keep  the  price  higher  than 
the  consumer?  is  nccessary?  He  has  a  wide  option  here.  The 
influence  of  advertising  upon  the  mind  of  the  consumer 
is  so  strong  that  he  will  pay  considerably  more  for  the  cele- 
brated article.  Many  producers  take  advantage  of  this 
important  psychological  fact  and  charge  an  unjustifiably 
high  price  to  the  consumer. 

Of  late  there  has  been  increasing  inquiry  as  to  the  cost 
of  these  trade-marked  articles  as  compared  with  like  prod- 
Added  cost  ucts  sold  in  bulk.  Some  investigations  of  the 
and^'^advlr^  subject  have  been  made  which  seem  to  in- 
tised  goods  dicate  that  the  consumer  pays  dearly  for  the 
advantages  which  trade-marked  goods  confer  upon  him. 
The  report  of  the  Osborn  Commission  on  this  point  has 
already  been  referred  to.  Mr.  George  W.  Perkins,  chair- 
man of  the  Mayor's  Food  Committee  in  New  York,  has 
urged  all  consumers  who  wish  to  consult  economy  to  buy 
their  food  in  bulk  to  avoid  the  excessive  cost  of  the  packaged 
goods.  Numerous  investigators  beside  these  quoted  have 
advised  the  same  thing.  On  the  other  hand,  women  are 
often  urged  against  buying  the  "just  as  good"  bulk  prod- 
ucts. Which  is  right?  Here  is  an  important  question  for 
the  American  housewife.  The  question  of  difference  in 
cost  should  not  be  a  difficult  one  to  settle,  so  far  as  there  is 
available  in  bulk  the  product  of  the  same  kind  and  quality 
to  compare  with  the  advertised  brand,  which  is  often  the 

1  To  illustrate:  C.  W.  Post  of  Grape  Nuts  started  poor  and  left  an 
estate  of  $18,000,000;  Quaker  Oats  are  said  to  pay  annual  dividends 
of  $1 ,900,000,  while  each  letter  of  the  word  Uneeda  is  said  to  be  valued 
at  one  million  dollars. 


HANDLING   TRADE-MARKED   GOODS  1 99 

case.^  It  is  quite  probable  that  the  excess  of  cost  of  trade- 
marked  goods  over  bulk  goods  runs  all  the  way  from  a 
very  small  difference  up  to  double. 

The  question  for  the  co-operator  to  ask  is  whether  in 
each  particular  case  that  instrument — the  advertised  trade- 
mark— is  used  in  the  interest  of  the  consumer.  An  adver- 
tised commodity  is  worth  to  the  consumer  a  price  equal 
to  that  of  an  unadvertised  article  of  like  quality,  and  as 
much  more  as  the  assurance  of  merit  is  worth.  That  is, 
if  the  advertised  article  is  of  such  known  merit  as  to  af- 
ford an  insurance  and  peace  of  mind  to  the  consumer  over 
and  above  what  would  be  felt  regarding  the  unadvertised 
goods,  this  assurance  is  worth  paying  an  extra  price  for 
if  necessary.  2 

But  it  seems  to  me  that  the  more  fundamental  ques- 
tion is  not  choosing  between  package  goods  and  bulk 
goods.  The  question  is  whether  the  co-opera-  The  co-oper- 
tive  buying  system  will  not  enable  the  con-  select!  °a  k!! 
sumer    to   obtain    like    quality    and    adequate  ?°<^    package 

its       £[OOQS      fit 

assurance  of  quality,  cleanliness  and  sanitary  little  net  cost 
conditions  without  paying  the  excessive  price  of  the  ad- 
vertised brand. 

The  co-operative  system  has  an  advantage  which  or- 
dinary methods  of  merchandizing  do  not  possess  in  the 
matter  of  convening  to  the  consumer  assurance  of  quality; 
it  does  not  have  to  overcome  the  resistance  of  suspicion 
which  other  distributors  encounter.  We  know  that  all 
advertising  and  salesmanship  in  profit  distribution  has  to 

•  Brought  out  in  the  recent  suit  of  the  Great  Atlantic  and  Pacific 
Tea  Company  against  the  makers  of  "Cream  of  Wheat." 

'  It  is  frequently  asserted  that  the  cost  of  advertising  is  not  borne 
by  the  consumer  since  advertising  reduces  the  cost  of  distribution  so 
that  its  total  cost  is  not  as  large  a  percentage  as  it  would  be  if  no  ad- 
vertising were  done.  It  is  quite  true  that  the  cost  to  the  consumer 
may  be  reduced  through  advertising  just  as  transportation  may  be 
reduced  by  using  the  railroad  as  compared  to  the  wagon.  All  the  same, 
all  the  factors  of  cost  are  borne  by  the  consumer,  and  the  question  is 
always  pertinent  whether  a  less  costly  method  be  possible. 


200         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

encounter  a  barrier  which  stands  in  the  way  of  convincing 
the  consumer  by  reason  of  a  natural  distrust  of  the  dis- 
tributor on  the  part  of  the  consumer.  This  for  two  reasons: 
the  consumer  knows  that  the  distributor  is  tempted  by  a 
profit  motive  to  exaggerate  the  merits  of  his  goods,  and 
that,  in  the  consumer's  own  experience,  such  exaggeration 
is  common.  By  reason  of  this  discounting  of  the  represen- 
tations of  the  distributor  the  cost  of  advertising  and  sales- 
manship is  greatly  increased,  perhaps  doubled.  By  reason 
of  the  different  attitude  of  the  co-operative  buyer  such 
assurance  can  be  conveyed  for  a  fraction  of  the  cost  of  or- 
dinary profit  merchandizing  advertising. 

For  this  reason,  the  co-operative  policy  on  all  staple 
articles  would  seem  to  be  that  of  laboratory  test  and  cer- 
Co-operative's  tificate  of  the  co-operative's  expert.  Goods 
staple  °ar-^'  should  be  inexpensively  packaged  where  feasible 
tides:  test,  and  desirable,  and  when  such  a  package  of  oat- 
pac^age  an  j^^^^  ^^  other  product  SO  certified  is  offered  to 
the  consumer,  his  assurance  thus  received  should  be  wholly 
satisfactory,  and  thus  the  co-operative  consumer  can  have 
all  the  sanitary  and  quality  advantages  of  advertised 
goods  at  practically  bulk  prices. 

It  is  doubtful  if  sanitarily  packaged  goods  need  cost 
more  than  bulk  goods  of  hke  quality.  It  is  claimed  that 
the  automatic  weighing  and  packaging  machine  is  capable 
of  putting  up  goods  at  so  much  less  expense  than  the 
grocery  clerk  can  weigh  them  out  as  to  offset  the  cost  of 
the  carton  in  excess  of  the  cost  of  the  paper  bag  and  string. 
Whether  this  is  Hterally  true  I  have  not  been  able  fully 
to  satisfy  myself.  But  the  chances  are  that  the  excess  of 
cost  of  packaging  is  less  than  the  advantage  in  cleanliness 
and  convenience. 

The  grocery  clerk  at  $15  a  week  weighs  out  the  goods 
while  the  customer  waits  and  perhaps  witnesses  some 
carelessness  which  is  uncomfortable.  On  the  other  hand, 
the  girl  at  less  salary  than  the  clerk  tends  a  machine  which 
unerringly  puts  up  hundreds  of  packages  per  minute. 

So  the  question  is  not  primarily  between  packaged  or 


HANDLING  TRADE-MAEKED   GOODS  20I 

bulk  goods,  but  between  advertised  and  non-advertised 
goods.  For  it  is  not  the  packaging  which  mainly  costs, 
though  there  are  often  selling  frills  in  packages  and  labels 
which  are  expensive,  it  is  the  advertising  and  sales  program 
and  additional  profits  which  cost. 

But  it  is  the  advertising  which  conveys  the  impression 
of  assurance  of  quality.  How  can  this  and  greater  assur- 
ance be  enjoyed  without  the  expense  of  advertising?  Simply 
by  this  faith  which  co-operators  would  come  to  have  in 
the  0.  K.  of  their  unbiased  manager  and  buyer,  an  O.  K. 
built  upon  thorough  inspection  and  scientific  tests.  Con- 
sumers would  buy  as  corporations  now  buy:  this  is  what 
group  quantity  buying  means. 

Have  we  not  here  a  simple  method  whereby  the  co- 
operative buying  organization  could  save  the  consumer 
probably  as  much  as  twenty-five  per  cent  on  the  cost  of 
what  is  now  sold  to  him  through  advertising? 

The  conclusion,  then,  is  that  while  the  advertising  method 
of  marketing  products  has  been  of  great  advantage  to  the 
consumer,  this  advantage  can  be  had  through  co-operation 
at  a  fraction  of  the  usual  present  cost,  and  co-operators, 
therefore,  would  handle  advertised  brands  only  when 
goods  are  placed  within  the  reach  of  consumers  at  as  low  a 
cost  as  the  co-operative  plan  would  enable  that  to  be  done. 


CHAPTER  XrX 
CO-OPERATIVE  ADVERTISING  AND  SALESMANSHIP 

In  Chapter  VIII,  I  have  undertaken  to  indicate  the  atti- 
tude  of  co-operation  toward  sales  pushing  methods.  This 
has  been  applied,  in  Chapter  XVIII,  to  the  formulation  of  a 
policy  with  regard  to  branded  goods.  In  this  chapter  it 
is  my  purpose  to  discuss  the  practical  appUcation  in  the 
co-operative  store  of  advertising  and  salesmanship. 

One  of  the  largest  tasks  involved  in  the  development 
of  consumer  co-operation  is  the  working  out  and  building 
Meeting  the  up  of  a  System  to  diffuse  among  consumers 
need"™or'^in-  ^^^^  information  as  they  must  have  in  order 
formation  to  Spend  the  rewards  of  their  labor  for  that 
which  will  give  the  greatest  and  most  permanent  satisfac- 
tion.^   Such  a  system  will  be  a  new  thing  under  the  sun. 

1  Co-operative  advertising  and  salesmanship  should  feature  the 
goods  people  ought  to  buy  and  not  the  goods  which  make  a  profit 
for  somebody.  For  example,  foods  of  the  greatest  nutritive  value 
should  be  made  prominent  and  described.  Dr.  A.  W.  Smith,  chemist 
of  Baltimore,  is  authority  for  this  statement: 

"The  food-value  of  one  pound  of  corn-meal,  grits,  or  hominy,  cost- 
ing three  cents,  is  equal  to  the  food-value  of  any  of  the  following 
commonly  used  foods: 

I  pound  of  wheat  flour,  costing $0.06 

1  pound  of  rice,  costing 09 

iy2  pounds  of  cheese,  costing 60 

2  ^  pounds  of  round  steak,  costing 80 

2  dozen  eggs,  costing 90 

yi  peck  of  potatoes,  costing 45 

6  pints  of  milk,  costing 30 

"The  South  knows  and  appreciates  the  value  of  white  corn  for  table 
use;  why  not  the  North,  the  East,  and  the  West?" 

It  is  difficult  to  exaggerate  the  benefit  to  consumers  which  could 
be  conferred  by  verifying  and  publishing  such  information  as  this. 


CO-OPERATIVE   ADVERTISING  AND   SALESMANSHIP      203 

The  aim  and  motive  will  be  so  different  from  those  of  the 
present  aggressive  pushing  of  goods  for  revenue  only  that 
perhaps  the  use  of  such  words  as  advertising  and  salesman- 
ship should  be  abandoned.  However,  in  the  new  system 
of  enlightening  consumers  there  will  be  necessary  functions 
to  perform  in  place  of  advertising  and  salesmanship,  so 
it  may  make  for  clearness  to  retain  these  words,  inexact 
as  they  are,  at  least  for  the  present. 

That  keen  student  and  able  statistician,  Edward  Atkin- 
son, author  of  Dislrihulion  of  Products,  wrote  me  twenty- 
five  years  ago  that  "the  physical  distribution  of  commodi- 
ties is  child's  play  compared  with  the  distribution  of  ideas 
about  products,  which  must  precede  their  sale." 

The  co-operative  store  manager,  buyer,  advertising  man- 
ager and  salesman  stand  between  two  worlds:  the  world 
of  human  needs  and  desires  and  the  world  of  products  to 
meet  those  needs  and  desires.  The  co-operative  purveyor 
will  study  the  actual  and  potential  demands  of  the  con- 
sumer, not  with  the  view  of  exploiting  them  at  a  profit,  but 
with  the  detennination  to  develop  and  satisfy  those  de- 
mands to  the  best  interest  of  the  consumer. 

The  kinds  of  information  needed  by  the  consumer  to 
enable  him  to  buy  wisely  relate  to  the  nature,  utility  and 
merits  of  a  commodity  and  also  to  its  cost  and  tlie  best 
way  of  obtaining  the  article. 

There  are  two  immediate  reasons  for  giving  this  informa- 
tion: the  first,  to  enable  the  consumer  to  buy  wisely;  the 
second,  to  speed  up  the  flow  of  goods  through  the  store, 
thus  reducing  the  percentage  of  expense  by  the  larger 
volume  of  goods  handled.  The  profit  dealer  advertises  to 
increase  his  profits;  the  co-operative  advertises  to  serve 
its  members  and  to  reduce  expenses.  ^ 

^  Edward  A.  Filene,  of  Boston,  from  his  broad  experience  and  pro- 
gressive outlook,  has  this  to  say: 

"Large  advertising  tends  to  concentrate  business  into  larger  units 
and  this  is  a  good  thing,  because  it  tends  to  reduce  the  cost  of  seUing. 
The  cost  of  doing  business  at  retail  in  this  country  to-<lay  is  simply 
disgraceful — and  this  is  not  the  individual  retailer's  fault,  either.    It 


204         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

Means  of  con-  Considered  from  the  point  of  view  of  the 
veying  in-  means  of  conveying  it,  there  are  three  kinds  of 
formation        information  to  be  given  to  the  consumer: 

1 .  General  information  about  specific  commodities  which 
is  addressed  to  consumers  in  all  parts  of  the  country  cor- 
responding to  general  or  national  advertising. 

2.  Store  publicity  addressed  to  patrons  and  possible 
patrons  of  the  individual  store. 

3.  Co-operative  salesmanship. 

General  information  which  has  no  special  reference  to 
the  individual  store  but  is  equally  useful  in  all  parts  of  the 
Function  of  country  cannot  be  economically  purveyed  by 
general  ad-  the  local  store.  This  must  be  done  on  a  large 
vertising  gcale  for  numerous  consumers  and  stores  at 
the  same  time.  In  setting  forth  the  nature,  utiHty  and 
merits  of  a  certain  make  of  soap,  for  instance,  large  factors 
of  expense  are  making  illustrations,  writing  the  matter, 
setting  up  the  type  and  making  ready  to  print.  If  the 
information  once  ready  were  sent  only  to  the  patrons  of  a 
single  store  the  expense  per  persons  reached  would  be  quite 
prohibitive.  But  if  the  information  be  sent  to  hundreds 
of  thousands,  these  considerable  initial  expenses  spread 
over  so  many  units  become  very  small  per  person  addressed. 
Preparation  of  Hterature  and  advertisements  for  nationally 
advertised  products  take  advantage  of  this  great  economy 
of  large  editions.    Large  circulations  are  the  same  in  effect. 

Co-operators  in  publishing  the  merits  of  their  certified 

simply  means  that  we  are  inefficient  about  it— there  are  all  sorts  of 
wastes  and  dislocations  in  the  process  of  getting  goods  from  the  man- 
ufacturers into  the  hands  of  the  consumers.  I  believe  in  large  ad- 
vertising because  I  know  that  it  reduces  the  cost  of  doing  business, 
and  therefore  gives  the  goods  to  the  consumer  more  cheaply.  I  don't 
mean,  however,  that  retail  business  must  develop  only  along  the  line 
of  the  department  store— there  is  just  as  much  opportunity  to  con- 
centrate in  the  selling  of  a  specialty.  Filene's  is  a  specialty  shop  doing 
a  $io,ooo,ooo-a-year  business."  The  key  to  the  most  striking  results 
of  the  modern  efficiency  movement  is  the  accelerating  of  rate  of  flow  of 
output  without  increasing  expenses,  or  without  pro  rata  increase. 


CO-OPERATIVE  ADVERTISING  AND   SALESMANSHIP      205 

brands  referred  to  in  the  last  chapter  should  take  advan- 
tage of  this  economy  of  output  of  printed  matter.  It  is 
quite  possible  that  in  default  of  better  media,  it  might  be 
to  their  advantage  to  buy  space  in  such  publications  as 
reach  a  large  number  of  their  members.  Co-operators  can 
certainly  take  advantage  even  now  of  this  idea  of  joining 
in  the  printing  of  matter  adapted  to  all  or  a  number  of 
stores.  Circulars  could  be  printed,  a  part  general  and  a 
part  devoted  to  a  local  store.  The  Wheatsheaf  is  a 
periodical  issued  in  Manchester  for  English  co-operative 
stores.  Most  of  the  matter  is  general,  but  a  page  or  two  is 
devoted  to  the  local  store  to  which  copies  are  sold  by  the 
hundred  or  thousand. 

The  second  class  of  information  or  store  advertising  re- 
lates to  the  advantages  of  the  store,  the  principles  of  doing 
business,  reasons  why  consumers  should  buy  scope  of  store 
at  and  become  connected  with  the  store.  Refer-  advertising 
ence  will  also  be  made  to  the  kinds  of  goods  kept,  a  few 
words  of  confirmation  as  to  the  merits  of  certain  articles, 
prices  and  such  other  matter  as  the  policy  of  the  particular 
store  suggests.  It  should  be  borne  in  mind  that  one  of 
the  places  where  the  co-operative  store  is  to  save  money 
for  the  consumer  is  in  the  expense  of  advertising.  For 
this  reason,  the  wise  policy  is  to  impress  upon  members  and 
possible  members  the  reasons  why  the  co-operative  store 
can  purvey  goods  at  less  expense  than  the  private  store. 
It  is  better  to  tell  this  story  strongly  than  to  depend  upon 
always  quoting  prices.  In  other  words,  it  is  better  to 
"sell"  the  store  itself  to  a  woman  than  merely  "Seiung"  the 
to  get  her  to  buy  a  few  things  which  impress  ^^^^^ 
her  as  being  cheap.  If  a  store  can  impress  upon  the  people 
tlie  true  idea  of  a  co-operative  store  and  then  hve  up  to  it, 
there  will  be  no  necessity  for  constant  quoting  of  prices, 
for  the  buyer  will  take  it  for  granted  that  in  the  long  run, 
she  can  get  net  advantages  through  the  co-operative. 

This  raises  the  question  of  special  prices  and  "leaders" 
to  attract  trade.  These  are  in  principle  opposed  to  the 
co-operative  idea,  and,  if  resorted  to  as  a  temporary  ex- 


206         CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

pedient,  require  much  explaining  away  and  make  the  work 
of  co-operative  education  difficult.  The  wiser  plan  is  to 
keep  away  from  the  "leader"  scheme  and  sell  the  idea  of 
co-operation.  This  is  not  to  imply  that  advertising  should 
not  give  prices. 

Prices  should  be  given  very  freely,  for  the  purpose  of 
Prices  should  advertising  is  to  give  information  and  there 
be  given  is  no  kind  of  information  more  important  or 
freely  interesting  than  price.    In  fact,  it  is  the  price 

which  gives  meaning  and  interest  to  the  context. 

If  use  is  to  be  made  of  newspaper  space  it  is  desirable 
to  occupy  some  special  position  regularly.  For,  besides 
other  readers,  a  certain  number  will  come  to  look  for  the 
ad.  It  is  also  desirable  to  use  a  special  border  which  catches 
the  eye  readily. 

If  circulars  are  to  be  used  a  mailing  list  can  sometimes 
be  made  up  from  the  membership  books,  books  of  churches 
Circulars  or  certain  societies  which  have  civic  or  social 
uplift  aims.  This  for  the  reason  that  these  might  be  more 
sympathetic  with  the  co-operative  ideal  than  the  average 
run  of  people  in  the  directory  or  telephone  book.  Some 
sort  of  duplicating  machine  is  usually  a  good  thing  to  have 
for  the  purpose  of  sending  informal  notices,  and  so  keeping 
closely  in  touch  with  members  not  readily  reached. 

Window  dressing  is  an  important  means  of  advertising, 
especially  where  the  window  is  good  and  the  location  fa- 
vorable. The  passerby  looks  into  a  window  as  into  the 
face  of  the  institution  and  he  should  not  be  met  by  a  mean- 
ingless expression.  Windows  should  always  look  attrac- 
tive and  show  interesting  goods  and  their  prices.  To 
allow  the  same  display  to  remain  too  long,  or  to  have  no 
adequate  display  is  to  allow  a  costly  and  valuable  part  of 
the  store  to  remain  idle.  It  should  be  set  to  work.  In- 
formation should  be  sought  in  books  and  papers  that  the 
window  may  be  at  work  all  the  time  to  the  best  ad- 
vantage. 

One  of  the  best  kinds  of  advertising  is  signs  on  and  in 
the  store.     Everything  about  the  store  should  have  an 


i 


CO-OPERATIVE   ADVERTISING  AND   SALESMANSHIP      207 

appeal.  The  article  itself  will  not  appeal.  The  article  itself 
well  displayed  on  shelf  or  in  case  with  price  marked  plainly 
is  interesting  and  good  advertising.  It  helps  store  cards 
to  speed  up  sales  and  to  prevent  mistakes.  *°^  ^'^ns 
Prices  are  not  alone  interesting  in  themselves,  but  make 
everything  to  which  they  are  attached  interesting.  Little 
placards  giving  a  few  words  of  information  about  an  article 
help  to  interest  people  in  the  store  and  to  sell  goods.  Also 
mottoes  as  to  the  aims  of  the  society  should  find  a  place 
in  the  store. 

Of  course,  the  style  of  all  advertising  should  be  in  keep- 
ing with  the  tone  and  aims  of  the  store.  It  does  not  need 
to  be  said  that  superlatives  and  extravagant  praise  of  goods 
should  be  avoided.  The  co-operative  advertiser  is  in  a 
position  to  win  a  degree  of  the  consumer's  confidence  which, 
for  the  profit  advertiser,  is  practically  out  of  the  question. 
To  take  advantage  of  the  position  and  acquire  the  maxi- 
mum of  influence  requires  restraint  and  such  language  as 
the  trustworthy  employ.  Put  yourself  in  the  consumer's 
place.  That  will  reduce  the  necessity  for  much  speaking 
and  make  co-operative  advertising  far  more  effective  than 
private  publicity  and,  of  course,  the  manager  in  charge  of 
advertising  in  the  co-operative  store  should  be  so  well  in- 
formed that  he  can  speak  with  authority. 

The  function  of  store  advertising  is  to  begin  where 
general  publicity  leaves  off  and  leave  off  where  the  business 
of  the  salesman  begins.  In  other  words,  the  store  sales- 
store  advertising  should  aim  to  give  all  possible  manship 
information  about  goods  and  the  store  which  will  serve  the 
consumer,  and  facilitate  the  work  of  the  salesman  and 
speed  up  the  flow  of  goods  through  the  store.  The  proper 
division  of  work  along  these  lines  is  essential  to  success. 
The  work  of  the  salesman,  then,  begins  where  printed 
salesmanship  or  advertising  leaves  off,  and  ends  with  the 
completest  service  to  the  consumer.  In  a  sense,  the  sales- 
person should  know  and  be  ready  to  confirm  and  supple- 
ment all  that  has  been  done  by  general  publicity  and  store 
advertising.    The  business  of  the  co-operative  salesman  is 


2o8         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

not  persuasion  for  profit,  but  enlightenment  for  service. 
He  is  the  technical  expert  to  whom  the  co-operative  con- 
sumer should  be  able  to  come  for  advice  with  the  utmost 
confidence  in  both  his  reliability  and  disinterestedness.  It 
is  this  position  of  the  co-operative  salesman, — one  of  great 
usefulness,  which  should  give  inspiration  to  the  young 
man  or  woman  who  seeks  to  take  an  oar  and  not  to  be  a 
mere  passenger. 

Careful  study  should  be  given  to  this  subdivision  of  the 
work  of  imparting  information.  It  is  not  economical  for  a 
Advertising  salesperson  to  have  to  do  the  work  which 
maliswp  ^^'  should  have  been  done  by  general  publicity  or 
should  over-  by  store  advertising.  The  salesman  lecturing 
po^ssUie*^^  ^^  to  an  audience  of  one  on  the  nature  and  merits 
of  a  five  cent  cake  of  soap  is  earning  very  small  wages.  It 
is  as  uneconomical  as  for  a  carpenter  to  plane  his  own 
lumber  and  make  his  window  sash.  The  salesman  should 
do  the  finishing  after  the  other  work  has  been  done  by  ma- 
chinery. Advertising  is  essentially  doing  by  machinery 
what  would  otherwise  have  to  be  done  more  expensively 
by  hand. 

The  time  of  the  sales  force  in  talking  to  customers  about 
goods,  selling  and  putting  up  goods,  costs  all  the  way  from, 
say  five  per  cent  i,n  some  stores  to  fifteen  per  cent  in  others, 
on  the  retail  price  of  the  goods.  The  less  customers  know 
about  goods  the  longer  it  takes  to  wait  upon  them  and  the 
more  it  costs.  It  is  quite  possible,  if  uninformed  customers 
are  waited  upon  at  an  expense  of  ten  per  cent,  that  if  two 
per  cent  had  been  well  expended  in  advertising  the  goods 
which  those  customers  had  to  buy,  they  could  have  been 
served  at  a  sales  salary  cost  of  five  per  cent.  Of  course, 
some  time  should  be  spent  with  each  customer  and  it 
should  not  be  done  grudgingly.  But  it  costs  money  and 
so  far  as  is  possible  should  be  mainly  devoted  to  giving  in- 
formation such  as  cannot  well  be  printed.  Thus  in  selling 
a  pair  of  shoes  of  course,  the  questions  as  to  size  and  fit 
need  to  be  gone  over  carefully.  But  such  questions  as 
general  merits  and  quality  should,  for  economy,  have  been 


CO-OPERATIVE  ADVERTISING  AND   SALESMANSHIP      209 

SO  impressed  by  advertising  as  to  require  only  brief  con- 
firmation by  the  salesperson. 

In  the  economics  of  retailing  too  much  attention  cannot 
be  given  to  the  expeditious  handling  of  sales.  It  is  not 
alone  salesmen's  time  and  expense  that  are  importance  of 
involved  in  slow  selUng,  but  all  the  overhead  expeditious 
expenses  of  the  store.  Economy  in  a  store,  *°  ^ 
like  economy  in  manufacturing,  is  dependent  upon  large 
output.  If  the  customer  knows  goods  so  well  that  all  that 
is  necessary  is  for  him  to  call  for  them,  and  if  the  goods  are 
so  packaged  that  they  may  be  quickly  put  up,  the  sales 
expense,  and  therefore  the  total  expense,  can  be  reduced 
to  a  very  low  figure.^ 

Everything  about  the  store  should  be  conspicuously 
clean  and  orderly.     Merely  to  be  free  from  dirt  is  not 

1  Since  the  large  development  of  distribution  through  advertised 
brands,  an  acute  question  has  arisen  between  manufacturers  and  mer- 
chants. The  manufacturers  having  spent  large  sums  of  money  to 
familiarize  the  consumer  with  their  goods  insist  that  dealers  shall  sell 
them  at  smaller  margins  of  profit  since  the  advertising  done  has  created 
demand  and  made  the  goods  easier  and  cheaper  to  sell. 

Thus  a  manufacturer  often  charges  the  retailer  eighty  cents  for  an 
article  marked  by  the  manufacturer  to  sell  to  the  consumer  at  one 
dollar.  The  department  stores  whose  selling  expense  may  be  thirty 
per  cent  or  even  more  naturally  object  to  selling  an  article  upon  which 
only  twenty  per  cent  can  be  made.  This  leads  dealers  to  have  goods 
put  up  under  their  own  brands  upon  which  they  can  make  a  larger 
percentage  of  profit.  IManufacturers  of  trade-marked  goods  are  thus 
having  trouble  so  to  fix  the  retail  and  wholesale  prices  as  to  induce 
dealers  to  co-operate  with  them. 

The  question  is  further  complicated  by  the  wide  variation  in  the 
cost  to  do  business  in  different  localities  and  the  different  kinds  of 
stores.  A  profit  of,  say,  twenty-five  per  cent  might  be  quite  satisfac- 
tory to  a  country  merchant  whose  expense  of  doing  business  is  only 
fifteen  per  cent,  but  not  acceptable  to  the  metropolitan  retailer  whose 
expense  of  doing  business  is  twice  as  much. 

The  co-operative  plan  would  settle  the  whole  matter  by  giving  all 
net  profits  back  to  customers,  thus  making  the  purchase  dividends 
larger  on  fixed  price  goods  where  lower  expense  is  incurred  for  retailing. 


210        CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 

enough.  That  is  negative;  there  is  a  positive  cleanliness 
that  applies  to  salespeople  and  other  employees  as  well  as 
to  the  store  itself.  In  the  average  store  where  men  are 
employed  the  workers  are  just  far  enough  away  from  cleanli- 
ness to  miss  the  mark.  Fine  clothes  are  not  necessary, 
but  to  act  the  part  of  fellowship  and  equaUty  impUed  in 
co-operation  it  is  necessary  to  have  clean  face  and  hands — 
finger  nails  included — aprons,  collar,  cuffs,  shirt  and  boots, 
and  to  have  suit  well  brushed.  Moreover,  bathing  should 
not  be  neglected.  Where  the  work  is  such  as  to  cause 
perspiration,  frequent  bathing  is  especially  needed. 

In  short,  the  things  which  are  implied  in  refinement  are 
required  and  are  perfectly  feasible  in  a  co-operative  store 
worker.  For  it  should  be  borne  in  mind  that  the  value  of 
a  co-operative  employee  depends  not  merely  upon  manual 
equipment,  but  much  more  upon  intelligence  and  char- 
acter. 

The  more  a  salesperson  or  other  responsible  employee 
who  comes  in  contact  with  members  and  the  general  public 
knows  about  co-operation,  the  better.  Consumers'  co- 
operation is  an  important  movement  destined  to  have  a 
wide  and  beneficent  influence  on  the  future  of  America,  as 
it  has  already  had  in  Europe.  To  know  about  it  and  be 
able  to  answer  questions  intelligently  is  very  desirable. 
Moreover,  the  more  a  man  or  woman  knows  about  co- 
operative buying,  the  more  interested  he  or  she  will  be  in 
his  work  and  the  more  interesting  to  others. 

It  is  also  desirable  to  be  able  to  explain  why  a  co-operative 
store  does  not  strive  for  profit,  in  order  to  explain  the  atti- 
Saiesman  tude  of  the  co-operative  society  towards  the 
should  get  a  members  and  the  public.    The  interest,  joy  and 

vivid  sense  of        , ,        .  [■  ^  ,        .     ,  .  ,1  , 

the  signif-  cnthusiasm  of  a  worker  m  his  work  depends  upon 
icance  of  the  \y[^  understanding  its  significance.  That  is 
and  of  his  especially  true  when  one  is  engaged  in  a  work 
part  in  it  which  is  organized  and  conducted  to  better  the 
condition  of  everyone  connected  with  it.  Another  thing 
which  gives  the  co-operative  worker  a  sense  of  self-respect 
and  satisfaction  is  the  fact  that  he  is  under  no  temptation  to 


CO-OPERATIVE   ADVERTISING  AND   SALESMANSHIP      211 

deceive  or  injure  his  customer  in  the  slightest  degree  and  he 
knows  the  member  knows  this. 

In  his  service  for  the  consumer  the  salesman  will  not,  of 
course,  obtrude  his  advice  or  suggestions  when  they  are 
not  wanted.^  If  he  recognizes  his  responsibility  fully,  he 
will  not  be  egotistical  for  he  will  realize  that  what  he  knows 
is  little  compared  to  what  there  is  to  be  known.  Nor  will 
he  expect  to  find  sure  compensation  for  his  valuable  services 
in  the  appreciation  of  the  consumer.  There  are  many  rea- 
sons why  we  all  often  fail  to  appreciate  those  who  help  us 
and  also  why — when  we  feel  appreciation — we  often  neglect 
to  express  it.  The  real  compensation  and  the  sure  reward 
is  in  the  consciousness  of  being  moved  by  the  right  spirit. 
Of  this  no  one  can  be  deprived,  and  it  is  a  thing  really  worth 
while. 

1  A  skillful  salesperson  will  learn  and  practice  some  psychology.  For 
instance,  he  will  remember  that  it  is  better  to  promise  delivery  a  little 
too  late  than  too  early  to  avoid,  for  his  customer,  the  discomfort  of 
disappointment.  He  will  note  the  fact  that  when  one  wants  a  thing 
is  the  time  of  all  others  that  he  will  appreciate  it.  Moreover,  he  has  a 
sense  of  discomfort  if  he  does  not  have  it.  If  the  time  goes  by,  he  has 
experienced  a  season  of  lack  which,  however,  may  taper  off  so  that 
when  the  thing  comes,  if  too  long  delayed,  it  gives  little  satisfaction 
compared  with  what  it  would  have  given  when  the  want  was  fresh 
and  acute. 


PART  IV 
BACKGROUND  AND  OUTLOOK 


CHAPTER  XX 

EUROPE  AND  BEYOND:  A  STORY  OF  PEACEFUL 
CONQUEST 

"In  spite  of  the  recurring  failure  of  individual  societies  planted  in 
barren  soil,  this  form  of  democratic  association  has  but  one  record, — a 
continuous  increase  in  membership,  trade  and  accumulated  wealth." — 
Beatrice  Potter:  The  Co-Operative  Movement  in  Great  Britain. 

Although  several  good  and  comprehensive  histories  of 
co-operative  distribution  in  Europe,  especially  in  Great 
Britain  ^  are  fairly  easy  of  access,  let  us  con-  The  course 
sider  at  this  point  the  principal  events  and  gen-  operative'^*'' 
eral  trend  of  the  movement.  It  is  in  its  begin-  movement 
nings  a  history  of  dark  days  of  appalling  need  with  a  great 
ideahsm  conceiving  this  as  the  remedy,  and  the  rapid  spread 
of  the  idea  and  wide  experimentation,  unfortunately  based 
on  a  faulty  method,  and  soon  followed  by  complete  collapse. 
This  false  start  which  resulted  in  the  almost  complete  ex- 
tinction of  the  movement  was  followed  in  "the  hungry 
forties"  by  a  fresh  start  with  the  brilliant  invention  of 
dividends  on  purchases,  a  humble  and  insignificant  begin- 
ning, slow  growth  at  first  becoming  increasingly  rapid, 
the  multiplication  of  societies,  the  formation  of  wholesale 
societies,  the  entry  into  the  fields  of  production,  and  banking 
and  shipping,  the  spread  of  the  movement  to  other  lands, 

^Beatrice  Potter  (Mrs.  Sidney  Webb):  The  Co-operative  Move- 
ment in  Great  Britain. 

Catherine  Webb :  Industrial  Co-operation. 

George  Jacob  Holyoake:  The  History  of  Co-operation,  2  vols. 

Percy  Redfern:  Story  of  the  C.  W .  S.    C.  W.  S.,  1913. 

C.  R.  Fay:  Co-operation  at  Home  and  Abroad. 

C.  W.  S.  Annuals. 

Co-operative  News,  a  weekly  periodical  (see  for  current  history). 


2l6        CO-OPERATION  THE  HOPE  OF  THE  CONSUMER 

independent  origins  of  other  forms  of  co-operation,  the 
coming  to  self-consciousness  of  the  forces  and  their  federa- 
tion, educational  campaigns,  constant  growth  and  develop- 
ment and  to-day  one  of  the  mightiest  economic  structures 
in  the  world,  made  yet  stronger  by  the  great  war  and  gaining 
in  strength  from  year  to  year  and  from  land  to  land. 

To  appreciate  its  present  extent  and  power  we  shall  need 
to  contrast  these  with  its  modest  origins,  its  present  record 
of  conquest  with  its  initial  failure,  the  imperial  democracy 
it  is  to-day  with  its  penury  and  the  pitiful  paucity  of  power 
in  the  early  days. 

The  industrial  revolution  which  followed  the  introduction 
of  power  machinery  replaced  domestic  industry  by  the  fac- 
Robert  Owen  tory  systcm,  stimulated  the  growth  of  manufac- 
of^Co-opera-  turing  Centers  and  increased  wealth,  but  at  the 
tion  "  beginning  of  the  nineteenth  century  the  utterly 

unrestricted  competition  which  was  the  practice  in  industry 
was  so  merciless  to  labor  that  those  years  are  known  as 
"the  period  of  despair."  Long  hours,  the  labor  of  women 
and  children,  the  apprenticing  of  pauper  children,  starva- 
tion wages,  a  pitiful  lack  of  education,  long  stretches  of 
unemployment,  lack  of  protecting  laws,  and  hovel  "homes 
that  consumed  them  like  graves"  made  the  lot  of  the  la- 
borers one  of  misery  and  degradation.  Robert  Owen,  to 
whom  by  universal  consent  is  given  the  name  of  "the 
Father  of  Co-operation,"  after  proving  in  the  factory  town 
of  New  Lanark  that  he  could  be  at  once  a  pre-eminently 
successful  business  man  and  a  social  reformer,  inestimably 
improving  the  condition  of  the  laborers,  projected  various 
plans  of  social  regeneration.  Though  distributive  co-opera- 
tion was  not  a  favorite  child  of  his,  Owen's  influence  and 
advocacy  led  to  the  formation  of  co-operative  stores  which 
increased  to  the  number  of  four  or  five  hundred.  They  sold 
their  goods  at  reduced  prices  and  turned  all  profits  into  the 
business  and  set  aside  members,  as  capital  increased,  to 
make  shoes,  clothing  and  other  articles.  From  1828  to  1834 
there  was  a  marked  period  of  co-operative  pioneering.  A 
number  of  short-lived  co-operative  journals  were  published, 


EUROPE   AND   BEYOND  217 

co-operative  congresses  were  held,  and  even  a  co-operative 
wholesale  started.  But  the  successful  way  had  not  been 
found.  The  lack  of  cohesion  in  the  membership,  the  lack 
of  a  clear  and  definite  plan  for  conducting  the  business,  and 
the  lack  of  proper  laws  led  to  a  speedy  collapse  of  this  en- 
tire movement.  It  is  a  question  whether  any  of  its  societies 
lived  on  into  the  next  decade. 

Success  came  only  with  the  estabHshment,  ten  years  after 
the  stranding  of  this  first  movement,  of  the  Uttle  store  at 
Rochdale  with  its  great  invention  or  adoption  ^  The  Rochdale 
of  the  idea  of  dividends  on  purchases.  But  the  *^** 
great  issue  hung  in  the  balance  for  some  years  and  the  be- 
ginnings were  painfully  meager.  Although  this  has  already 
been  touched  upon  in  Chapter  VI  a  further  reference  will 
emphasize  the  contrast  of  those  days  of  small  things  with 
the  mighty  achievement  and  yet  mightier  promise  of  to-day. 

A  group  of  flannel  weavers,  few  and  poor,  out  of  employ- 
ment and  nearly  out  of  food,  who  lived  in  Rochdale,  a  mill 
town  of  Lancashire,  began  meeting  near  the  end  «  j.^,   owd 
of  1843  to  consider  how  to  better  their  condition.  Weyvur's 
The  teetotallers  pointed  to  total  abstinence  as     °^ 
the  one  way  out.     The  Chartists  believed  that  only  the 
universal  suffrage  for  which  they  were  working  would  help. 
The  followers  of  Robert  Owen  advocated  co-operation  and 
their  views,  which  prevailed,  led  to  the  organization  of  a 
society,  first  registered  October  24,  1844,  which  was  known 
as  "The  Rochdale  Society  of  Equitable  Pioneers,"  as  its 
main  object  was  to  establish  equity  in  industry.     These 
humble  men  were  dreaming  a  mighty  dream,  for  they  stated 
their  objects  to  be  the  establishment  of  a  co-operative  store, 

» "It  may  be  noticed,  however,  that  the  practice  of  dividing  'profits' 
upon  purchases  did  not  originate  with  the  Rochdale  Pioneers;  several 
other  societies,  notably  Springham  Society,  and  several  societies  in 
the  west  of  Scotland,  claim  to  have  followed  this  practice  in  the 
thirties,  Meltham  Mills  in  1827,  and  one  Scottish  society  about  1822. 
But  it  is  to  them  (the  Rochdale  Pioneers)  we  owe  the  inauguration  of 
the  present  system  upon  a  basis  which  has  proved  to  be  so  sound."— 
C.  Webb:  hidmtrid  Co-operation,  page  10. 


2l8 


CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 


the  erection  of  homes,  the  establishment  of  manufacturing 
establishments,  the  rental  and  cultivation  of  estates,  and 
even  planned  "that,  as  soon  as  practicable,  this  society 


proceed  to  arrange  the  powers  of  production,  distribution, 
education  and  government." 

Their  means  for  realizing  their  dream  were  meager.  At 
first  to  raise  the  necessary  capital  each  subscribed  two  pence 
a  week,  and  there  were  but  a  dozen  subscribers.    Utopia 


EUROPE  AND   BEYOND  219 

was  afar  off.  By  the  time  they  were  fully  organized  twenty- 
eight  and  later  forty  had  subscribed  the  two  pence  a  week, 
but  they  lived  apart  and  each  weekly  collection  involved  a 
twenty-mile  circuit.  But  devoted  men  undertook  it  and 
every  Sunday  three  collectors  went  about.  The  amount 
was  raised  to  three  pence,  but  it  took  over  a  year  to  collect 
enough  to  start  the  store.  But  when  they  had  raised  thus 
slowly  and  laboriously  twenty-eight  pounds  in  EngHsh 
money  they  rented  the  ground  floor  of  a  warehouse  in  Toad 
Lane,  Rochdale,  paying  a  rental  of  ten  pounds  a  year,  and 
started  the  store,  which  was  to  open  a  new  era,  on  Decem- 
ber 21,  1844.  It  sold  at  first  only  four  commodities,  flour, 
butter,  sugar  and  oatmeal,  and  was  open  but  twice  a  week, 
on  Saturday  and  Monday  evenings.  After  buying  the  store 
fixtures  they  had  but  fifteen  pounds  to  invest  in  their 
stock  of  groceries.  The  members  took  turns  in  serving  in 
the  shop.  The  fixtures  and  trade  utensils  cost  fourteen 
pounds. 

Their  early  existence  was  most  precarious.  As  in  co- 
operative stores  ever  since  few  had  the  vision  and  most 
thought  only  of  the  immediate  advantages,  and  The  long  hard 
if  ever  the  quality  of  goods  was  inferior  or  the  p*^ 
prices  a  trifle  higher  they  took  their  trade  elsewhere.  If 
it  cost  a  little  trouble  to  trade  there  or  involved  some  passing 
sacrifice,  considerations  trifling  and  temporary  compared 
with  the  objects  sought,  others  fell  by  the  wayside.  But 
the  loyal  and  far-seeing  ones  stood  by  and  slowly  the  store 
grew.  By  INIarch,  1845,  they  decided  to  take  out  a  license 
to  sell  tea  and  tobacco.  So  poor  were  they  that  their 
records  show  that  when  they  needed  additional  capital  one 
member  "promised  to  find,"  not  to  pay,  subscribe  or  ad- 
vance, but  "to  find"  half  a  crown,  another  five  shillings  and 
one  daring  soul  a  pound.  At  the  end  of  their  first  year  they 
had  eighty  members,  a  capital  of  iSi  pounds  and  the  weekly 
receipts  averaged  in  that  last  quarter  of  1845  3°  pounds, 
$150.  The  next  year,  in  October,  they  began  to  sell  meat. 
The  three  years,  1846-1848,  found  the  store  in  grave  dan- 
ger from  apathy,  dullness  and  public  distress.    There  were 


220         CO-OPERATION  THE  HOPE   OF  THE  CONSUMER 

few  new  members  and  receipts  but  slightly  larger;  1846  was 
worse,  as  times  were  hard,  trade  was  bad  and  members 
withdrew.  But  there  were  shght  gains.  Where  the  average 
weekly  receipts  the  last  quarter  of  1845  had  been  30  pounds, 
they  were  34  pounds  in  1846,  36  pounds  in  1847  and  then 
the  growth  began  to  be  apparent,  for  they  rose  in  1848  to 
80  pounds  and  in  1849  to  179  pounds.  By  1848  the  lower 
room  of  the  old  warehouse  was  outgrown  and  the  whole 
building,  with  its  three  floors  and  attic,  was  rented  for 
twenty-one  years.  It  was  several  years  after  the  store 
started  before  it  was  kept  open  all  day.  Its  membership 
increased  to  no  in  1847,  to  140  in  1848,  to  390  in  1849  and 
to  over  600  in  1850,  and  by  185 1  its  capital  had  increased  to 
almost  2,800  pounds. 

The  success  of  the  Rochdale  store  gave  co-operation  a 
new  impetus.  In  1847-8  several  stores,  modelled  upon  its 
Growth  and  plan.  Sprang  up  in  its  immediate  neighborhood, 
extension  They  multiplied  at  first  chiefly  in  Lancashire 
and  Yorkshire.  By  1851  there  were  151  co-operative  stores 
in  the  north  of  England  and  the  Midlands  of  Scotland,  but 
few  had  fifty  members.  While  the  stores  were  increasing 
in  number  the  Rochdale  Pioneers  were  extending  their  de- 
partments. Shoemaking,  and  clogging  and  tailoring  were 
added  in  1852,  starting  them  in  the  field  of  production. 
They  had  helped  to  start  the  Rochdale  District  Corn  Mill 
along  lines  of  consumers'  co-operation  in  1850,  and  in  1854 
members  of  the  society  started  the  Rochdale  Co-operative 
Manufacturing  Society  for  cotton  spinning,  dividing  the 
profits  in  the  latter  with  the  workers.  By  1855  the  Rochdale 
store  had  enough  neighboring  stores  to  start  a  wholesale 
department.^  Not  all  of  these  ventures  succeeded,  but  they 
were  all  indications  of  increasing  strength. 
^  A  valuable  re-enforcement  came  to  the  young  movement 
from  the  Christian  Socialists.  The  Owen  movement  had 
The  Christian  been  largely  a  middle  class  movement  super- 
Sociaiists  imposed  upon  the  workers,  and  the  deism  of 
Owen  had  discredited  it  with  the  churchmen.  The  Rochdale 
1  Catherine  Webb:  Industrial  Co-operation,  18. 


EUROPE  AND  BEYOND  221 

movement  was  almost  exclusively  a  working-class  move- 
ment. Starting  just  when  the  Rochdale  movement  did,  the 
Christian  Socialists  undertook  to  combat  the  ideas  and 
practices  of  both  "the  unsocial  Christians  and  the  un- 
christian SociaHsts."  They  had  a  group  of  unusual  leaders 
in  Frederick  Denison  Maurice  and  Charles  Kingsley,  the 
novehst  and  poet,  both  Church  of  England  clergymen, 
Thomas  Hughes,  the  author  of  the  "Tom  Brown"  books, 
E.  Vansittart  Neale  and  J.  M.  Ludlow,  all  barristers.  Like 
Owen,  they  appealed  to  the  professional  and  leisure  classes 
and  promoted  "self-governing  work-shops."  Few  of  these 
shops  lasted,  but  their  educational  work  was  of  greatest 
value  in  disposing  these  classes  to  a  sympathetic  apprecia- 
tion of  the  new  movement  and  destroying  prejudice  against 
it.  The  working-class  co-operators  and  the  middle-class 
churchmen  and  lawyers  soon  found  themselves  working  to- 
gether. The  influence  and  advocacy  of  the  Christian  Social- 
ists with  the  help  of  John  Stuart  Mill  secured  the  passage  of 
the  Industrial  Provident  Society  Act  in  1852  which  gave 
a  legal  status  to  co-operative  societies,  and  its  amendment, 
ten  years  later,  which  made  possible  the  next  important 
development  in  co-operation,  the  union  of  societies  for 
wholesale  distribution  and  production. 

Various  abortive  efforts  to  start  a  wholesale  society  failed, 
among  others  one  in  183 1,  in  the  days  of  the  Owenitc  move- 
ment, and  one  in  1856  by  the  Rochdale  Pioneers.  The  estab- 
" Gradually,"  writes  Beatrice  Potter, ^  ''with  ;!^.^^'J^°^*^°*g* 
the  rise  of  stores  in  other  districts,  the  habit  of  wholesale 
discussion,  with  the  desire  for  joint  action  spread  southwards 
to  the  Midlands,  and  northwards  to  Durham  and  North- 
umberland and  across  the  border  to  the  Co-operators  of 
Glasgow  and  its  neighborhood."  This  led  to  the  establish- 
ment in  1863  of  the  North  of  England  Co-operative  Whole- 
sale Society  of  which  forty-five  local  societies  took  the  stock. 
It  opened  a  store  in  Manchester  with  two  men  and  a  boy 
in  March,  1864.  By  November  a  buyer,  cashier,  clerk, 
warehouseman  and  youth  were  engaged  in  larger  premises. 
1  Co-operative  Movement  in  Great  Britain,  Si. 


222         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

The  next  summer  it  moved  to  still  larger  quarters,  and  the 
next  year  appointed  a  butter  buyer  and  opened  an  office  for 
him  in  Tipperary.  It  built  its  own  six-story  warehouse  in 
1869  after  opening  at  Kilmallock,  Ireland,  its  second  pur- 
chasing depot,  and  later  a  third  at  Limerick.  The  history 
of  the  growth  of  the  Co-operative  Wholesale  Society,  as  it 
came  to  be  called,  is  one  of  the  most  romantic  of  the  modern 
economic  world,  comparable  with  that  of  the  Standard  Oil 
Company  and  the  United  States  Steel  Corporation,  and  the 
Canadian  Pacific  Railway  and  greater  than  them  all  be- 
cause of  its  democracy.  Its  first  branch,  that  at  Newcastle, 
its  second  branch  that  of  London,  and  its  first  manufactur- 
ing establishment  came  in  the  early  seventies. 

A  society  which  purchased  in  such  great  quantities  nat- 
urally turned  its  attention  to  the  possibility  of  entering  the 
The  marvel-  field  of  production,  and  in  1873  it  began  its 
tivi'ty^'^of  "the  rotable  career  in  that  line  by  starting  at  Lower 
c.  w.  s.  Crumpsall  the  making  of  biscuits  and  sweets. 
The  second  venture  was  a  boot  and  shoe  factory.  To-day 
the  Annual  of  the  Co-operative  Wholesale  Society  shows 
that  it  has  five  clothing  factories,  eight  great  flour  mills, 
woolen  cloth  works,  cocoa  and  chocolate  works,  soap,  candle, 
glycerine,  lard,  starch  and  blue  works,  furniture,  bedding 
and  cartwrighting  factories,  printing,  bookbinding  and 
lithographic  works,  preserve,  candied  peel  and  pickle  works 
and  vinegar  brewery,  shirts,  mantle  and  underclothing 
factory,  cap  and  umbrella  making  factories,  and  that  it  also 
manufactures  overalls  and  shirts,  drugs,  pinafores  and 
blouses,  leather  bags,  cigars  and  tobacco,  flannels  and 
blankets,  corsets  and  hosiery,  paints,  varnish  and  colors, 
brushes  and  mats,  hardware  and  tinplate,  butter  and  mar- 
garine.^   It  has  not  succeeded  in  every  enterprise  and  has 

^  In  its  Annual  for  191 7  the  Co-operative  Wholesale,  Limited,  de- 
scribes its  activities  as  follows:  "Wholesale  General  Dealers,  Man- 
ufacturers, Bankers,  Insurers,  Millers,  Printers,  Bookbinders,  Box- 
makers,  Lithographers,  Architects,  Engineers,  Builders,  Shipowners, 
Butter  Factors,  Lard  Refiners,  Bacon  Curers,  Fruit  Growers,  Dry- 
salters,  Spice  Grinders,  Saddlers,  Curriers,  Tanners,  Cutlers,  Iron 


EUEOPE   AND   BEYOND  223 

occasionally  lost  heavily,  but  its  history  is  one  of  well-nigh 
unprecedented  growth.  Notable  among  its  developments 
has  been  the  establishment  of  its  own  banking  facilities 
and  its  own  insurance  department.  The  banking  depart- 
ment is  the  bank  of  the  co-operative  societies  and  the 
chief  outlet  of  their  accumulating  capital.  Its  invest- 
ments and  assets  at  the  close  of  19 15  were  reported  as 
£7,928,854.  Its  deposits  and  withdrawals  in  1916  amounted 
to  $1,347,919,678.  A  Co-operative  Insurance  Society 
which  has  lately  been  taken  over  by  the  C.  W.  S.  carries  the 
fire  insurance  of  the  co-operative  societies.  A  Health  In- 
surance Section  has  been  formed  and  this  had  165,000  mem- 
bers in  19 13.  The  society  has  creameries  in  Ireland,  tallow 
and  oil  factories  in  Australia,  bacon  factories  in  Denmark 
and  Ireland,  great  tea  plantations  in  Ceylon  and  Southern 
India,  ^  fruit  fanns  at  various  points  in  England  where 
scores  of  acres  raise  all  kinds  of  fruit  and  vegetables  for  the 
stores,  and  the  preserving  establishments  and  where  toma- 
toes, cucumbers  and  grapes  are  extensively  cultivated  under 
glass;  foreign  buying  depots  in  New  York,  in  Copenhagen, 
Aarhus,  Odense,  Esbjerg  and  Herning,  in  Denmark,  in 
Gothenberg,  Sweden,  and  in  Montreal,  Canada.  It  has 
a  great  concession  of  three  hundred  square  miles  in  West 

Founders  and  Tinplate  Workers,  Tea  Growers,  Blenders,  Packers, 
Farmers  and  Importers,  Fellmongers,  Dealers  in  Grocery  and  Pro- 
visions, Drapery,  Woolens,  Ready-made  Clothing,  Boots  and  Shoes, 
Brushes,  Crockery,  Carpets,  Furniture,  Coal,  Hides,  Skins,  Bones, 
etc.,  etc. 

Manufacturers  of  Flour,  Butter,  Margarine,  Biscuits,  Sweets,  Pre- 
serves, Pickles,  Vinegar,  Candied  Peels,  Cocoa,  Chocolate,  Tobacco, 
Cigars,  Snuff,  Soap,  Candles,  Glycerine,  Starch,  Blue,  Paints,  Varnish 
and  Colors,  Boots  and  Shoes,  Saddlery,  Woolens,  Clothing,  Flannels, 
Shirts,  Mantles,  Underclothing,  Overalls,  Umbrellas,  Leather  Bags, 
Corsets,  Millinery,  Hosiery,  Silesias,  Shirtings,  Coloured  Cotton 
Goods,  Pants,  Ladies'  Underwear,  Cardigans,  Furniture,  Brushes, 
General  Hardware,  Cutlery,  Bedsteads,  Wire  Mattresses,  Mats,  Fats, 
etc. 

^  Through  their  Wholesales  the  English  and  Scotch  co-operators 
own  3,386  acres  in  Ceylon. 


224         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

Africa  where  it  secures  the  palm  oil  needed  in  its  soap  works. 
Its  buyers  are  in  direct  contact  with  the  Greek  growers 
and  driers  of  fruit.  It  has  at  Denia,  in  the  center  of  the 
Spanish  raisin  district,  a  packing  house  which  employs  six 
hundred  persons  in  picking,  packing  and  shipping  fruit. 
It  owns  and  operates  the  largest  flour  mills  and  the  largest 
boot  and  shoe  factories  and  textile  mills  in  Great  Britain. 
It  is  the  largest  single  buyer  of  Canadian  wheat  and  has 
recently  purchased  ten  thousand  acres  of  wheat  land  in 
Saskatchewan.  It  has  its  own  ships  operating  between 
England  and  France.  Each  decade  it  tends  to  become  more 
self-contained  and  to  produce  more  and  more  of  what  it 
needs  to  supply  the  co-operators.  It  had  in  1916,  28,818 
employees  and  1,189  retail  societies  held  shares  in  it.  Its 
resources  in  share  capital,  loans,  reserve  and  insurance 
funds  amounted  to  over  $64,000,000  and  its  net  sales  that 
year  were  $253,838,159.  The  latest  available  figures  show 
that  for  the  first  six  months  of  191 7  its  sales  were  over 
£29,000,000,  a  gain  of  19^/3  per  cent  over  the  corresponding 
period  of  the  previous  year,  and  its  manufactures  were 
£9,713,651,  an  increase  of  272/3  per  cent.  The  same  half 
year's  deposits  and  withdrawals  in  the  banking  department 
amounted  to  £164,590,551,  an  increase  of  2178  per  cent.^ 
The  Enghsh  Co-operative  Wholesale  is  the  largest  food 
supply  establishment  in  the  world. 

Ahnost  equally  striking  is  the  history  and  growth  of  the 
companion  society,  The  Scottish  Wholesale.  In  many 
great    undertakings    these    two   societi^   co-operate.     It 

*  In  considering  co-operative  finances  one  should  bear  in  mind  the 
following  point  of  view: 

"The  total  capital  investment  in  1915  was  $236,014,375.  Some 
years  ago  it  was  estimated  by  a  writer  for  a  British  financial  organ 
that  if  the  British  Co-operative  Movement  was  put  on  the  joint-stock 
market  on  a  capitalistic  basis  it  would  sell  for  ten  times  the  value 
placed  on  the  assets  in  its  balance  sheets;  that  is  to  say,  British  work- 
ingmen  were  escaping  having  to  provide  interest  on  nine-tenths  of  the 
load  of  capital  usual  in  capitalistic  business." — The  Canadian  Co- 
operator,  April,  191 7,  page  14. 


EUROPE  AND   BEYOND  225 

parallels  the  activities  of  the  Enghsh  Wholesale  and,  like 
it,  has  gone  into  banking  and  production.  It  has  wheat 
elevators  in  Manitoba,  fish  curing  works  in  jjjg  Scottish 
Aberdeen  (which  not  only  cure  fish  and  render  Co-operative 
cod  liver  oil  but  supply  with  fresh  fish  the  retail  ^^'^^^^ 
stores  all  over  Scotland,  handling  over  2,600  tons  of  fish 
annually),  creameries  and  piggeries  in  Ireland,  and  at 
Shieldhall,  Glasgow,  a  remarkable  manufacturing  center 
where  more  industrial  operations  are  carried  on  within  one 
common  gateway  than  any  other  place  in  the  world.  The 
Shieldhall  works  employ  nearly  4,000  men  of  a  hundred 
different  trades  and  occupations  in  sixteen  different  fac- 
tories, and  produce  goods  to  the  value  of  over  £1,148,000  a 
year.  The  Scottish  Wholesale  operating  for  less  territory 
than  the  English  has  less  volume  of  trade,  and  yet,  in  1916 
its  net  sales  were  $70,465,319  and  the  first  sLx  months  of 
19 1 6  were  £8,431,441,  and  their  productive  works  produced 
£3,130,760  worth  of  goods,  a  gain  of  44  per  cent.  Perhaps 
nothing  impresses  an  American  as  more  striking  about  this 
great  business  than  the  oft-cited  fact  that  WilUam  Maxwell, 
who  was  for  thirty  years  the  president  of  the  Scottish  Whole- 
sale, conducted  its  fifty-milhon-dollar-a-year  business  and 
never  demanded  a  higher  salary  than  $38  a  week.  He  is 
said  to  be  only  one  of  many  who  get  their  recompense  not  in 
private  profit,  but  in  pubhc  service. 

Ireland  decimated  in  population  and  impoverished  has 
responded  to  the  same  magic  touch.  In  1889  Sir  Horace 
Plunkett  and  Father  T.  A.  Finley  started  a  cam-  Ireland 
paign  for  co-operation  among  the  Irish  farmers.  This 
coincided  with  a  revolution  in  the  methods  of  buttermaking, 
and  attention  was  centered  in  the  butter  industry.  Sir 
Horace  as  a  Unionist  and  Father  Finley  as  a  Jesuit  were  each 
suspected  in  different  sections  and  it  was  difficult  to  get 
the  movement  under  way.  Over  fifty  meetings  had  to  be 
held  before  the  first  co-operative  creamery  was  started. 
There  was  only  indifference  at  first,  but  soon  societies  began 
to  be  formed.  In  1889  there  was  one  society  with  butter 
sales  of  £4,363.    By  191 1  there  were  934  societies  with  but- 


226         CO-OPERATION   TIIE  HOPE   OF   THE   CONSUMER 

ter  sales  of  £1,908,314.  Not  only  is  butter  made_  co- 
operatively, but  seeds  and  feeds  and  fertilizers  and  agricul- 
tural implements  are  bought  co-operatively  and  agricultural 
credit  on  the  Raiffeisen  plan  has  been  widely  adopted.  In 
1905  26  of  the  32  counties  had  such  banks.  By  January, 
1913,  there  were  947  co-operative  societies  in  Ireland  with 
103,000  members  and  an  overturn  of  £3,200,000.  Co- 
operative distribution,  too,  is  developing.  There  is  a  large 
society  in  Belfast  which  started  in  1889,  struggled  for  years 
but  in  1 914  did  a  business  of  £400,000  and  dealt  in  every- 
thing from  milk  to  coal.  In  Lisbon,  in  County  Antrim, 
there  is  a  society  with  1,450  members  and  a  $200,000  annual 
business.  The  County  of  Cook,  Queenstown  and  Armagh 
also  have  successful  societies. 

Before  turning  to  the  continent  it  remains  to  state  the 
present  size,  not  alone  of  the  wholesale  societies,  but  of  all 
the  co-operative  societies  which  form  the  offspring  of  the 
little  Toad  Lane  store  in  Rochdale  of  1844.  The  latest 
available  figures  are  for  the  year  1914,  and  these  show  in 
the  entire  United  Kingdom  3,699  societies  with  3,504,456 
members  and  as  these  are  mainly  the  heads  of  famihes,  it  is 
estimated,  counting  five  to  each  member,  that  a  third  of 
the  population  of  Great  Britain  are  co-operators.  ^  In  some 
counties  half  the  people  are  co-operators,  and  in  others 
three-quarters.  In  great  Leeds  and  little  Kittery  nearly  the 
entire  population  is  connected  with  the  movement.  There 
are  70  societies  that  have  memberships  of  more  than  10,000; 
that  of  Leeds  has  63,000.  The  average  membership  of  the 
societies  is  2,200.  The  sales  in  1914  were  £147,550,084,  and 
the  profits  £15,609,484.  One  realizes  how  much  they  have 
done  for  their  members  when  he  reads  that  since  1861  they 
have  had  net  sales  of  £2,727,767,066  and  made  a  net  profit 
of  £264,873,062,  which  has  been  returned  to  the  consumers. 

Fleets  of  steamers  bring  to  the  stores  and  homes  of  these 
British  consumers  what  their  own  buyers  have  purchased 
"  A  state  for  them  in  America,  Australia,  Canada,  Den- 
within  a  state"  mark,  France,  Germany,  Greece,  Turkey,  Hol- 
land,  Spain,  India  and   Sweden.    A  great   Co-operative 


EUROPE  AND   BEYOND  227 

Union,  "the  conscience  of  the  movement"  carries  on 
tireless  educational  and  propaganda  work.  Great  co- 
operative congresses  convene  at  stated  intervals.  Widely 
circulated  periodicals  keep  the  co-operators  in  touch  with 
every  development  of  their  mutual  cause.  It  is  indeed  "one 
of  the  greatest  accomplishments  of  the  working  class  in  the 
nineteenth  century."  It  is  as  Lord  Rosebery  says  "a  state 
within  a  state"  of  ever  increasing  importance  and  power. 

The  British  co-operative  movement  is  an  epitome  of  the 
world  movement  and  the  greatest  achievement  of  co-opera- 
tion. It  will  doubtless  soon  be  surpassed  in  size  by  the 
growth  in  other  lands,  but  the  glory  of  the  discoverers  and 
pioneers  must  ever  belong  to  Britain.  To  an  unusual  degree 
it  represents  the  logical  development  of  co-operation.  It 
began  in  a  small  way  and  spread  slowly,  consolidating  its 
territory  as  it  grew.  When  it  attained  sufficient  strength 
the  diflferent  societies  began  to  co-operate  in  wholesale  buy- 
ing as  the  individual  members  of  each  society  co-operated 
in  retail  buying.  When  the  wholesale  was  assured  of  a 
great  and  steady  trade  it  entered  the  field  of  production, 
and  began  manufacturmg  or  growing  article  after  article. 
The  fourth  step  came  naturally  and  inevitably.  Control 
of  the  supply  of  raw  materials  must  be  secured  and  it  is  at 
this  point  that  the  British  co-operators  are  working  to- 
day. 

They  are  asking  themselves  if  they  are  prepared  for  the 
great  period  of  reconstruction  that  will  follow  the  war. 
They  are  centering  on  two  great  efTorts,  the  endeavor  to 
make  themselves  powerful  poHtically  and  the  endeavor  to 
secure  control  of  raw  materials,  an  endeavor  which  has  led 
the  great  wholesales  to  obtain  their  concessions  in  Sierra 
Leone  and  Western  Nigeria,  to  purchase  great  tracts  of 
wheatlands  in  Saskatchewan  and  to  move  on  to  the  col- 
leries,  and  to  formulate  a  definite  poUcy  of  getting  at  the 
land,  the  coal  pits,  the  wheat  fields,  the  oil  centers. 

The  British  movement  also  represents  the  adaptability 
of  co-operation.  Ireland  was  a  land  of  different  character 
and  needed  a  different  form  of  co-operation,  so  agricultural 


228         CO-OPERATION  THE   HOPE   OF   THE   CONSUMER 

co-operation  was  adopted  from  Denmark  and  France,  and 
co-operative  credit  from  Germany  to  meet  the  special  needs. 

One  problem  remains  unsolved  and  it  is  the  great  unsolved 
problem  of  co-operative  distribution.  Shall  there  be  a 
division  of  the  profits  of  the  factories  of  the  wholesales 
wholly  among  the  societies  which  constitute  its  member- 
ship, or  shall  the  workers  in  those  factories  also  share  in  the 
profits?  The  English  Wholesale  after  decades  of  discussion 
and  experimentation  has  adopted  the  first  alternative,  the 
Scottish  Wholesale  the  second.  The  future  must  decide 
how  the  equitable  adjustment  can  be  made  between  the 
co-operative  consumer  and  the  co-operative  producer. 

The  day  does  not  seem  far  distant  when  co-operation  will 
be  the  greatest  single  force  in  the  kingdom.  It  is  thoroughly 
organized  and  knows  its  power  and  has  its  ideas  about  social 
readjustments.  It  may  be  that  the  great  period  of  recon- 
struction following  the  war  will  witness  its  ascendency. 
Everywhere  is  the  growing  conviction  that  the  people 
should  control  the  people's  business.  The  public  utilities 
and  great  industries  should  not  be  run  for  the  profit  of  the 
few.  Yet,  when  we  try  with  our  present  pohtical  machinery 
to  take  any  of  these  over,  we  are  often  notoriously  ineffi- 
cient. Possibly,  we  have  witnessed  in  co-operation,  so  far, 
only  a  period  of  apprenticeship  and  when  the  day  of  realiza- 
tion comes,  we  shall  see  that  a  great  organization  has  been 
perfected  in  these  early  decades  which  can  conduct  business 
and  industry  efficiently,  and  that  its  only  knowledge  and 
purpose  and  care  is  to  administer  them  by  and  for  the 
people.  "The  state  within  a  state"  may  conceivably  be- 
come greater  in  power  and  democracy  than  the  present 
pohtical  organization  and  the  economic  come  to  dominate 
the  political  because  of  its  greater  efiiciency  and  truer 
democracy. 

E.  S.  W. 


CHAPTER  XXI 

EUROPE  AND  BEYOND:  A  STORY  OF  PEACEFUL 
CONQUEST  (Continued) 

Second  only  to  the  development  of  co-operation  in  Great 
Britain  has  been  that  in  Germany.  It  has  been  assumed  at 
times  that  it  succeeded  in  Great  Britain  because  co-operative 
of  some  peculiar  fitness  of  the  British  character  distribution 
for  this  particular  thing.  But  its  rapid  spread  "^  ermany 
in  many  lands  shows  this  reasoning  faulty.  Charles  Gide, 
the  great  French  authority  on  co-operation,  says  "one 
would  not  think  a  people  like  the  Germans  used  to  organiza- 
tion, coercive,  state  and  militaristic,  could  succeed  in  one 
so  free  and  spontaneous;  but  certain  things  inherent  in  the 
German  character  are  specially  fitted  for  it — the  spirit  of 
discipline  which  subordinates  the  individual  interest  to  the 
general  interest,  the  gregarious  instinct  which  presses  it  to 
make  a  mass,  an  enormous  capacity  for  distribution  and  the 
cult  of  organization — all  make  the  German  people  especially 
good  subjects  for  co-operation,"  ^  And  history  itself  demon- 
strates the  soundness  of  this  conclusion.  The  first  Rochdale 
co-operative  store  was  started  in  Germany  near  Magdeburg 
in  1864,  but  it  was  not  until  the  last  years  of  the  century 
that  the  co-operative  store  movement  really  was  under  way. 
It  has  grown  even  more  rapidly  than  in  England.  One  of 
the  tables  prepared  by  Charles  Gide  shows  the  comparison. 

England  Germany 

No,  of  Thousands  Sales  by  No.  of  Thousands    Sales  by 

of  Members      Millions  of  Francs      of  Members       Millions  of 


Francs 

1902 

1709 

1251 

575 

176 

I9I4 

Gain 

3054 

78% 

2200 
76% 

1717 
200% 

6m 

0  ,-c^ 

24/  -  (; 

1  Charles  Gide:  Les  Socicles  Co-operatives  de  Consummation,  page  38. 


230         CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

This  shows  that  while  the  English  societies  were  gaining 
three-fourths  in  both  membership  and  sales  the  German 
societies  tripled  their  membership  and  nearly  quadrupled 
their  sales.  Still,  however,  the  membership  is  only  one-half 
of  that  of  England  and  the  sales  only  one-third,  but  now 
that  the  idea  is  firmly  rooted  it  grows  apace.  The  societies 
have  been  discouraged  by  official  Germany.  Officials  and 
members  of  certain  branches  of  public  service  were  for- 
bidden to  become  members  until  the  war  proved  the 
value  of  the  stores  to  the  nation.  ^  Yet,  in  face  of  the  opposi- 
tion some  mighty  organizations  have  arisen.  Gide  refers  to 
the  Hamburg  society  with  79,000  members,  the  Leipsig  with 
65,000  and  the  Breslau  with  more  than  100,000,  the  largest 
society  in  the  world.  The  latest  issue  of  the  International 
Co-operative  Bulletin  ^  shows  that  the  Hamburg  society  at 
the  end  of  1916  had  a  membership  of  99,000,  gaining  15,500 
during  the  year.  And  the  Berlin  society  has  reached  100,000 
members,  according  to  the  New  York  Evening  Mail}  The 
sales  of  these  societies  are  less  than  those  of  great  English 
societies  like  that  at  Leeds,  the  average  annual  sales 
per  member  in  Germany  being  384  francs  as  against  730 
francs  in  England,  taking  the  figures  of  Gide,  but  this  is 
due  to  the  fact  that  the  German  stores  sell  mainly  and 
usually  only  groceries,  while  the  English  stores  sell  almost 
everything  and  some  people  in  England  spend  all  their 

^  "In  Germany  and  Austria  it  is  a  usual  procedure  to  give  members 
of  the  stores  the  choice  of  retiring  from,  or  expulsion  from,  any  senior 
military  club  to  which  they  may  belong.  The  authorities  of  the  state 
railways  have  many  times  forced  the  railway  employees  to  sever  their 
connection  with  the  store.  The  pretext  for  all  these  persecutions  is 
the  assertion  that  the  retail  stores  are  serving  the  ends  of  the  Social 
Democratic  party,  to  which  no  well-affected  man  and  no  true  patriot 
could  belong." — Dr.  Hans  Miiller:  The  Co-operative  Movement 
Abroad,  1908.  * 

2  August,  191 7.  Most  of  the  statistics  in  this  chapter  not  otherwise 
credited  are  from  the  Internalional  Co-operative  Bulletin  or  in  a  few 
instances  from  other  co-operative  periodicals. 

*  Quoted  in  the  Co-operative  Consumer,  December,  191 5. 


EUROPE  AND  BEYOND  23 I 

wages  and  supply  all  their  wants  in  their  co-operative  stores. 
But  the  German  societies  are  beginning  to  enter  the  field 
of  production,  many  of  the  stores  having  their  own  bakeries 
and  bottling  works  and  some  having  corn  mills.  The  Berlin 
store  has  125  branch  stores,  and  the  Munich  one  had,  in 
1910,  27  branches,  while  the  Hamburg  society  has  205 
stores,  a  coal  depot  and  23  shops  for  the  sale  of  the  bones 
and  ribs  of  animals.  The  Hamburg  society  not  only  has 
a  butchery  and  bakery  and  com  mill,  a  confectionery  and  a 
coffee  roasting  department,  a  mineral  waters  bottling  depart- 
ment,—but  also  a  building  department  with  907  dwellings. 
The  German  Co-operative  Wholesale  located  at  Hamburg  is 
the  largest  in  the  world  outside  of  those  of  England  and 
Scotland,  and  in  1915  it  did  a  business  of  $38,000,000.^  ^ 

This  is  what  Germany  has  done  with  a  distinctly  British 
organization  which  we  see  in  a  less  developed  state  there, 
but  probably  destined  to  surpass  its  develop-  co-operative 
ment  in  its  motherland.  But  Germany  itself  ^^S'^J^^"' 
has  originated  and  developed  one  of  the  most  Raiffeisen 
important  of  all  co-operative  enterprises,  co-  ^"^^ 
operative  credit.  In  1849  Friedrich  Wilhelm  Raiffeisen 
started  a  loan  bank  for  the  peasants  the  members  of  which 
were  rich  philanthropists.  In  1862  he  founded  another  in 
which  the  borrowing  farmers  were  the  members,  founding 
it  on  the  idea  that  those  hopelessly  indebted  people  might 
combine  to  borrow  money  on  their  joint  responsibility,  and 
then  lend  it  out  among  themselves  for  a  slightly  increased 
interest.  This  succeeded  and  others  were  started  but  it  was 
not  until  18S0  that  they  began  to  multiply.  Each  is  lim- 
ited to  a  small  area,  is  an  association  of  neighbors  all  of 
whom  know  each  other.  The  purpose  of  every  loan  must  be 
stated  and  approved  and  no  securities  are  required,  but 
loans  are  made  only  to  members.^    They  boast  that  neither 

>The  member  of  the  Raiffeisen  bank,  though  he  have  the  best  of 
pledges,  is  rejected  unless  he  is  known  in  his  private  life  to  be  virtuous 
and  industrious.  The  man  of  doubtful  sobriety  has  no  chance  of 
obtaining  anything  from  a  country  bank.  Fay:  Co-operation  at  Hoim 
and  Abroad,  page  45. 


232         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

member  nor  creditor  has  ever  lost  a  cent  by  them.^  There 
are  16,000  of  these  Raiffeisen  banks  or  co-operative  credit 
societies  in  Germany  (16,927,  January  i,  1913)  with  a  com- 
bined capital  of  $650,000,000  and  deposits  of  $570,000,000. 
They  have  wrought  untold  good  in  improving  the  condition 
of  the  German  agricultural  classes.^ 

1  "Raiffeisen  always  kept  the  moral  aspect  very  prominently  before 
him.  He  was  himself  an  earnest  Christian,  and  he  insisted  that  all  the 
members  of  his  institutions  should  profess  the  Christian  virtues.  In 
his  propaganda  he  used  to  the  full  the  one  intelligent  power  in  rural 
districts,  the  parish  priest  or  pastor.  With  their  help  he  developed  a 
new  parochial  life  around  the  village  bank.  With  their  help  he  touched 
in  the  peasant  the  chord  of  neighborly  affection  and  stirred  him  to  give 
it  practical  effect."    Fay:  Co-opcralioji  at  Ilojtie  and  Abroad,  page  42. 

2  A  Raiffeisen  bank  is  never  what  a  Schulze-Delitzsch  bank  some- 
times is;  a  handsome  building  with  barred  windows,  within  which  are 
a  number  of  clerks  discharging  a  constant  round  of  business  while  the 
directors  interview  special  clients  in  a  room  apart.  It  is  a  small  room, 
probably  at  the  back  of  a  farm  building,  opened  twice  a  week  and  pre- 
sided over  by  a  single  occupant — the  accountant.  Business  is  apt  to 
proceed  desultorily;  a  small  child  brings  in  a  few  savings;  an  hour  after- 
wards a  palsied  old  man,  signing  by  a  cross,  draws  out  a  couple  of 
pounds,  and  so  on  to  the  end  of  the  day.  But  this  is  the  unimportant 
part  of  the  business.  The  really  important  part  is  the  weekly  meeting 
of  the  board  of  directors,  half  a  dozen  in  number,  who  meet  to  discuss 
the  various  credit  claims  which  have  arisen.  They  are  unpaid  as  by 
the  nature  of  their  work  they  can  afford  to  be. 

The  inculcation  of  punctuality  in  payment,  as  a  moral  duty,  was  the 
hardest  of  Raiffcisen's  tasks,  as  it  was  his  greatest  triumph.  Raiffeisen 
created  out  of  hopeless  chaos  the  only  kind  of  credit  organization  pos- 
sible for  the  small  agriculturalist.  To-day  more  than  50  per  cent  of  the 
independent  agriculturalists  of  Germany  are  members  of  rural  banks: 
and  another  10  per  cent,  chiefly  the  larger  farmers,  are  members  of 
town  banks.  The  non-co-operative  agriculturalist  is  becoming  the 
exception. 

The  change  wrought  in  many  of  these  villages  is  nothing  short  of  a 
revolution.  The  experience  of  the  parent  village  bank  may  serve  as 
an  illustration: — 

"About  an  hour's  walk  from  Ncuwied  on  the  Rhine  is  situated  on  a 
plateau  bordering  the  Westcrwald  the  little  village  of  Anhausen.    The 


EUROPE  AND  BEYOND  233 

Franz  Hermann  Schulze  started  in  1850  at  Delitzsch  the 
first  Schulze-Delitzsch  bank,  another  form  of  co-operative 
credit  and  one  which  preceded  the  Raiffeisen.  ^jj^  schuize- 
These  banks,  serving  the  industrial  classes,  Delitzsch 
stimulate  them  to  take  out  shares  and  pay  for  ^^"'^^ 
them  in  small  installments.  They  loan  only  to  members, 
require  security  and  loan  only  for  short  periods,  are  not 
limited  in  territory  and  are  very  different  from  the  Raif- 
feisen banks  and  not  so  strictly  co-operative,  though  classed 
as  such.  They  too  have  been  greatly  beneficent.  There 
were  985  of  these  in  Germany,  January  i,  191 2.  The  year 
before  they  had  loaned  $1,053,848,000,  an  average  of  a 
million  dollars  per  society.  These  two  co-operative  credit 
societies  are  Germany's  original  contribution  to  co-opera- 
tion.^ Strong  national  unions  of  these  banks  greatly 
strengthen  their  power. 

district  is  not  very  fertile  and  the  inhabitants  arc  mostly  small  peasant 
proprietors,  some  with  only  sufTicient  land  to  graze  a  single  ox  or  cow. 
An  owner  of  ten  acres  is  a  rich  man.  Before  the  year  1862  the  village 
presented  a  sorry  aspect;  rickety  buildings,  untidy  yards,  in  rainy 
weather  running  with  filth,  never  a  sight  of  a  decently  piled  manure 
heap;  the  inhabitants  themselves  ragged  and  immoral;  drunkenness 
and  quarrelling  universal.  Houses  and  oxen  belonged  with  a  few 
exceptions  to  Jewish  dealers.  Agricultural  implements  were  scanty 
and  dilapidated;  and  badly  worked  fields  brought  in  poor  returns. 
The  villagers  had  lost  hope  and  confidence,  they  were  the  serfs  of 
dealers  and  usurers.  To-day  Anhausen  is  a  clean  and  friendly- 
looking  village,  the  buildings  well  kept,  the  farmyards  clean  even  on 
work  daj's;  there  are  orderly  manure  heaps  on  every  farm.  The  in- 
habitants are  well  if  simply  clothed,  and  their  manners  are  reputable. 
They  own  the  cattle  in  their  stalls.  They  are  out  of  debt  to  dealers 
and  usurers.  Modern  implements  are  used  by  nearly  every  farmer, 
the  value  of  the  farms  has  risen  and  the  fields,  carefully  and  thoroughly 
cultivated,  yield  large  crops."  And  the  change,  which  is  something 
more  than  statistics  can  express,  is  the  work  of  a  simple  Raiffeisen 
bank.    Fay:  Co-operation  at  Home  and  Abroad,  pages  47-50. 

Inserted  quotation  is  from  A.  Wuttig's  F.  W.  Raijfeisen,  page  71. 

1  See  article  in  Encyclopedia  Brilannica  on  "Co-operation."  Also 
the  careful  study  in  Part  I  of  Fay's  Co-operation  at  Home  and  Abroad. 


234         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

The  extent  of  her  co-operative  forces  were  summarized 
by  U.  S.  Consul  General  A.  M.  Thackara  in  191 2  when  he 
The  extent  of  reported  30,000  co-operative  societies  in  Ger- 
co-operation  many  with  five  million  members,  or,  to  be  exact, 
in  Germany  21,981  co-operative  societies  of  all  kinds  with  a 
yearly  turnover  of  $6,188,000,000  and  employing  outside 
capital  of  $1,029,707,000.  How  these  were  divided  and 
how  they  were  growing  is  shown  in  his  compilation. 

igoj  1910  igii 

Credit  Societies iS,io8  i7,493  18,126 

Dairy  and  Milk  Vending  Societies 2,826  3.230  3>3°3 

Other  Agricultural,  Purchasing  and 

Selling  Societies  1 2,415  3,029  3,151 

Co-operative  Stores 1,922  2,311  2,355 

Other  Industrial,  Purchasing  and 

Selling  Societies 561  937  i.oi? 

Building  Societies 641  1,056  1,167 

The  next  country  in  co-operative  development  has  only 
recently  manifested  her  particular  aptitude.  This  is  Russia. 
Co-operation  Probably  no  people  have  been  so  trained  in  co- 
in Russia  operative  association.  Since  the  dawn  of  his- 
tory the  Russian  workers  have  associated  themselves  to- 
gether in  artels  which  are  purely  co-operative  working  or 
living  associations.  Russia  is  a  network  of  artels  and  such 
association  is  almost  instinctive  with  the  Russians.  Like- 
wise they  have  held  their  lands  in  the  mir  in  a  community 
of  ownership  and  occupation.  If  any  nation  was  prepared 
for  co-operation  it  was  such  a  people.'    It  was  1865  when 

1  Corn-selling  societies  are  Germany's  peculiar  contribution  to 
agriculture.  Out  of  her  rural  co-operation  banks  first  grew  supply 
societies  for  the  co-operative  purchase  of  farm  necessities,  then  different 
forms  of  co-operative  agricultural  production  like  dairies  and  vintries. 
Since  1895  the  corn  societies  have  established  with  government  aid 
co-operative  corn  houses  or  elevators.  The  potato  growers  here  like- 
wise established  co-operative  distilleries  and  spirit  warehouses.  Fay: 
Co-operation  at  Home  and  Abroad,  Part  II,  Chapter  II. 

2  "Data  on  Russian  Co-operation"  is  taken  from  an  article  on 
Growth  of  Russian  Co-operative  Societies  in  Commerce  Reports,  March  i, 


EUROPE   AND   BEYOND  235 

the  first  distinctly  modem  co-operative  society  was  sanc- 
tioned by  the  government  and  for  forty  years  progress  was 
slow.  Since  1905  when  the  failure  of  the  revolution  turned 
the  live  forces  of  the  nation  from  political  to  economic  ex- 
pression, it  has  had  a  phenomenal  growth.  It  was  purely 
idealistic  at  first,  more  of  a  cultural  moving  than  an  eco- 
nomic development.  It  had  been  a  movement  of  the  in- 
tellectuals for  the  people  until  1905  when  the  people  took  it 
up  for  themselves  and  did  their  own  organizing.  In  1905 
there  were  i  ,905  co-operative  organizations  in  Russia.  The 
gain  since  then  is  shown  in  the  following  table: 

1914 
Credit,  Loan  and  Savings  Societies  .12,751 

Consumers'  Societies 10,080 

Agricultural    Co-operative    Societies 

and  Associations 5,000 

Artels  of  Kustari  and  Creameries.  . .  3,000 


I9I5 

I9I6 

I9I7 

14,350 

15,450 

16,057 

10,900 

15,203 

20,000 

5,200 

5,500 

6,000 

3,300 

3,600 

4,000 

30,831     33,750     39,753     46,057 

The  membership  was  about  nine  million  in  1914  and  by 
January,  191 7,  it  had  risen  to  over  thirteen  million,  rep- 
resenting with  the  families  one-third  of  the  entire  popula- 
tion. The  utter  disorganization  of  industry  caused  by  the 
war  forced  the  population  to  build  up  co-operative  organiza- 
tions. The  Moscow  Union  of  Consumers'  Societies,  which 
started  in  1898  with  18  societies,  had  258  societies  in  1908, 
in  1914,  1,260  societies  and  a  turnover  of  five  million  dollars 
annually.  Its  membership  is  over  65,000.  The  turnover  of 
all  the  consumers'  societies  had  reached  $150,000,000  in 
1913.  The  Moscow  Union  or  the  Wholesale  increased  its 
membership  to  1,737  societies  in  January,  1916,  and  to  2,885 
by  September  of  the  same  year  and  3 ,000  by  the  end  of  the 
year.    Its  turnover  rose  from  the  five  million  dollars  of  1914 

191 7,  issued  by  U.  S.  Department  of  Commerce,  and  articles  in  The 
Russian  Co-operator  for  January  and  August,  191 7,  and  in  various 
numbers  of  The  International  Co-operative  Bulletin.  See  also  The 
Co-operative  Movement  in  Russia,  by  J.  V.  Bubnoff,  Manchester^  191 7. 


236         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

to  ii>^  millions  in  191 5  and  45  millions  for  191 6.  It  has 
become  one  of  the  greatest  business  enterprises  in  Russia, 
the  largest  importer  of  coffee  and  rice.  To-day  co-operation 
is  known  to  everybody  in  Russia/  it  is  recognized  and  sup- 
ported by  everybody,  people  and  govermnent  look  to  it  for 
the  rebuilding  of  the  nation.  Great  national  enterprises  are 
entrusted  to  it.  Next  to  the  soldiers'  and  workmen's 
councils,  the  co-operative  societies  elected  the  largest  rep- 
resentation to  the  assembly,  since  dissolved,  to  form  the  new 
constitution.  Russia's  revolution  is  industrial  as  well  as 
political  and  it  promises  to  become  the  great  co-operative 
commonwealth.  In  numbers,  both  absolute  and  relative,  it 
has  overtaken  the  western  countries.  Its  budget — that  of  all 
the  co-operative  societies — exceeds  the  budget  of  all  Russian 
towns,  Zemstvos  and  industrial  organizations  and  is  less 
than  only  the  State  budget.  ^ 

1  Co-operative  societies  exist  among  the  various  peoples  inhabiting 
Russia:  the  Armenians,  the  Georgians,  Tartars,  Kirghese,  etc.  Many 
co-operative  enterprises  have  telephone  installations,  electric  hght, 
the  central  electric  station  serving  several  villages.  In  some  districts 
they  build  roads.  There  are  also  societies  owning  and  working  coal 
mines.  The  Co-operative  Movement  in  Russia,  J.  V.  Bubnoff,  pages 
122,  150. 

2  "The  great  co-operative  organizations  of  Russia  are  absolutely 
democratic.  They  existed  before  the  revolution.  They  will  exist 
when  the  flames  of  the  revolution  have  died  down.  They  do  not 
merely  organize.  They  do  not  hold  all-night  meetings  and  engage  in 
complex  theoretical  disputes.  They  do  not  denounce  and  declaim 
and  defy  and  demonstrate.  They  do  not  interfere  in  other  people's 
business.  They  hardly  ever  touch  politics.  They  simply  work,  and 
through  their  work  they  have  laid  the  basis  of  a  new  life  in  the 
Russian  villages.  In  Central  Russia  and  Siberia,  in  the  south  and  in 
the  east,  the  provinces  are  studded  with  co-operative  societies,  and 
these  societies  are  linked  up  in  powerful  unions,  which  have  their 
centre  and  bank  in  Moscow. 

"In  no  country  has  co-operation  been  so  directly  and  rapidly  suc- 
cessful as  in  Russia.  It  has  created  a  new  type  of  enlightened  and 
progressive  peasant.  It  is  the  one  solid  instance  of  democratic  achieve- 
ment in  Russia."— Harold  Williams  in  New  York  Times,  Oct.  6,  1917. 


EUROPE  AND   BEYOND  237 

France  led  the  way  in  co-operative  production  and  is  re- 
garded as  pre-eminently  the  land  of  co-operative  production. 
Under  the  inspiration  of  Louis  Blanc  a  number  Co-operative 
of  self-governing  workshops  started  in  1848.  and^^'^^c'ui- 
There  were  140  of  these  in  1896  and  by  1910  ture  in  France 
they  had  multiplied  twice  and  thrice  in  number  and  were 
increasing  rapidly.  They  were  doing  over  $10,000,000 
annual  business.  They  are  combinations  of  workmen 
carrying  on  their  own  industries,  with  their  own  capital  or 
that  of  their  trades  unions.  They  engage  in  many  lines  of 
manufacturing.  Co-operative  production  is  the  great  con- 
tribution of  France.  But  her  agricultural  co-operation  is 
still  more  important.  The  Syndicats  Agricoles  are  combina- 
tions of  farmers  largely  for  purchasing  fertilizers  and  farm 
requisites.  They  date  only  from  1893  but  they  number 
thousands  with  hundreds  of  thousands  of  members.  Out 
of  them  have  grown  other  co-operative  associations,  two 
thousand  agricultural  banks,  besides  butter  factories,  oU 
pressing,  wine  making  and  threshing  societies,  two  thousand 
Gruyere  cheese  making  societies  and  8,000  mutual  insurance 
companies.^ 

The  co-operative  store  movement  has  had  a  slower  growth 
in  France.    The  first  one  started  in  1855  and  by  1883  there 
were  one  hundred.     The  bourgeoise  group  or-  co-operative 
ganized  apart  from  the  Socialistic.    There  were  stores   in 
two  separate  wholesales  in  Paris  and  these  two    ^^'^^ 
movements  were  united  under  the  influence  of  Belgian  and 
British  co-operators  just  before  the  war  broke  out.     Gide 
reports  for  19 14  3,261  co-operative  distributive  societies  in 
France  with  881,000  members  and  sales  of  321  million  francs. 
The  tendency  in  France  has  not  been  towards  fewer  and 
larger  societies  as  in  England  but  towards  more  and  smaller 
societies.    The  tables  compiled  by  Gide  in  his  Les  SocicUs 
Co-operatives  de  Consommation  show  this. 

*  See  Encyclopedia  Britannica,  article  on  "Co-operation." 


238         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

Great  Britain 

No.  of  Societies  No.  of  Members            Number  per  Society 

1862           331  89,000  269 

1872           930  324,000  348 

1882        1,043  598,000  573 

1892        1,420  1,127,000  794 

1902        1,476  1,893,000  1,215 

1912        1,399  2,750,000  1,970 

1914        1,385  3,054,000  2,205 

Since  1902  the  societies  have  decreased  in  number  but 
the  number  of  members  has  risen  by  two-thirds.  Since  1892 
there  are  thirty-five  less  societies  while  the  number  of  mem- 
bers has  tripled. 

France 

No.  of  Societies  No.  of  Members  Number  pe^  Society 

1900  939  375,000  400 

1907        2,214  705,000  318 

1914        3,156  876,000  278 

The  number  of  societies  has  tripled  since  1900  but  the 
average  membership  has  decreased  one-third.  The  Anglo- 
Saxon  tendency  is  to  amalgamate  and  the  French  tendency 
the  opposite.  France  has  more  small  societies  with  a  much 
smaller  overturn,  as  one-third  of  them  are  bakeries  and  most 
of  the  stores  sell  only  groceries. 

The  invaded  portion  of  France  is  especially  strong  in  co- 
operative societies,  so  the  great  war  is  necessarily  harming 
Effect  of  the  that  part  of  French  co-operation  but,  as  else- 
Great  War  where,  the  movement  as  a  whole  has  gained 
from  the  war.  The  co-operators  of  Paris,  at  the  request 
of  the  government,  have  taken  over  the  frozen  meat  trade. 
The  French-Swiss  society,  "Maggi,"  had  900  shops  in  Paris 
where  milk,  butter  and  eggs  were  sold.  These  were  all  com- 
pletely demolished  by  hooligans  on  the  outbreak  of  the  war 
who  were  spurred  on  by  its  rivals  to  believe  it  a  German  con- 
cern. The  co-operators  re-established  these  shops  and  have 
been  keeping  the  price  of  milk  down.    In  numbers  of  French 


EUROPE  AND   BEYOND  239 

towns  where  there  were  no  co-operative  societies  the  in- 
habitants, sometimes  with  the  help  of  the  municipality, 
have  formed  leagues  to  fight  against  exploitation  by  the 
local  dealers  and  have  thus  begun  co-operative  purchasing. 
Co-operative  stores  or  bakeries  are  being  formed  at  the  front. 
The  genius  of  each  nation  has  given  to  the  practice  of  co- 
operation new  forms  and  new  directions.  Belgium  has  an 
interesting  and  unique  development.  The  first  Belgium 
experiment  there  with  Rochdale  co-operation  failed.  Later 
Edouarde  Anseele,  the  son  of  a  poor  shoemaker,  started  a 
modified  form  under  which  the  dividends  were  not  returned 
but  used  to  form  a  fund  for  social  activities  for  the  members. 
The  co-operative  bakery  he  started  in  the  early  eighties  in 
Ghent  has  grown  into  a  mighty  institution  which  includes 
three  bakeries  with  an  output  of  110,000  loaves  a  week,  a 
large  department  store,  21  groceries,  5  clothing  and  6  shoe 
stores,  a  large  brewery,  one  of  the  largest  printing  establish- 
ments in  Belgium,  a  coal  depot  and  a  chain  of  drug  stores. 
The  many  cultural  and  social  benefits  that  flow  from  this 
society,  the  Vooruit  and  its  great  Maison  du  Peuple,  have 
already  been  recounted  in  Chapter  X.  Brussels  has  a  hke 
society  equally  large.  The  Catholic  Church  opposed  the 
movement  because  of  its  socialistic  affiliations  and  began 
organizing  other  co-operative  societies  and  as  a  result  co- 
operation in  Belgium  is  mainly  Catholic  in  the  country  and 
socialist  in  the  towns.  ^  B.  Seebohm  Rowntrce  published 
the  results  of  four  years'  studies  of  this  remarkable  co- 
operative development  in  agriculture  and  industry  in  his 
Land  and  Labour.  He  enumerates  among  others  in  19 10 
382  co-operative  societies  for  improving  the  breed  of  cattle, 
344  for  tliat  of  goats,  24  for  that  of  rabbits,  9  for  that  of 
pigs;  he  found  252  societies  of  beekeepers,  184  of  hor- 
ticulturists, 85  of  poultry-keepers,  39  of  hopgrowers.  77  of 
beetroot  cultivators;  497  co-operative  dairies  with  52,380 

^  "There  are  three  sharply-defined  branches  of  Belgian  co-opera- 
tion:— The  Socialist  associations  of  consumers;  the  Catholic  associa- 
tions of  agriculturists;  the  Neutral  middle  class  associations  of  town 
banks."    Fay:  Co-operation  at  Home  and  Abroad,  67. 


240         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

members  and  owning  a  fifth  of  all  the  cows  in  the  kingdom, 
and  in  1907  1,600  societies  for  the  insurance  of  live  stock, 
and  all  this  in  a  population  of  less  than  a  milUon  agricul- 
turalists. There  is  hardly  a  Belgian  village  without  its 
co-operative  society  and  hardly  a  society  that  does  not  con- 
tain a  majority  of  the  men  eligible  for  membership  and  these 
societies  are  federated  provincially  and  nationally.  The 
largest  of  these  provincial  federations  had  a  few  years  ago 
a  membership  of  40,000  and  in  one  year  bought  for  its  mem- 
bers $1,600,000  of  manures,  100  tons  of  seeds,  $25,000 
worth  of  machinery,  managed  70  co-operative  dairies,  a 
number  of  flour  mills  and  did  banking  through  300  credit 
associations  of  the  Raiffeisen  type.^ 

The  best  of  recent  figures  shows  205  distributive  societies 
in  19 14  with  170,000  members.  The  war  has  not  obHterated 
Co-operation  co-opcration  even  in  the  invaded  land.  The 
JTurS'^'th^  great  "Voorhuit"  in  Ghent  gained  1,400  mem- 
war  bers  in  the  first  year  of  the  war  and  opened  its 
26th  branch  store  and  had  an  overturn  of  5,688,000  francs. 
The  Belgian  refugees  started  in  one  of  the  detention  camps 
in  Holland  a  co-operative  society  and  in  Brussels  a  great 
"Co-operative  Store  for  the  Inhabitants  of  Brussels  and 
District"  has  been  established  for  the  duration  of  the  war 
with  a  capital  of  four  million  francs  to  supply  the  populace 
with  necessities. 

Democratic  Switzerland  is  one  of  the  banner  lands  on  the 
co-operative  map.  At  least  one-fourth  of  the  Swiss  people 
Switzerland  are  in  the  movement.  The  Union  of  Swiss  Dis- 
tributing Societies  had  421  affiliated  societies  in  1916  and 
its  overturn  for  that  year  was  74,658,781  francs,  a  48%  gain 
over  the  previous  year.  It  has  many  ramifications,  like 
its  control  of  the  Swiss  meat  trust, ^  its  society  for  exporting 
cheese  and  its  society  for  importing  eggs,  its  corn  mills, 
its  boot  and  shoe  factory,  banking  and  insurance  depart- 
ments and  estates  for  agricultural  production.    The  affil- 

^See  article  on  "Imperishable  Belgium"  by  Bruno  Lasker  in  the 
Survey,  Dec.  5,  19 14. 
2  See  Chapter  X. 


EUROPE  AND  BEYOND  24 1 

iated  societies  have  a  trade  of  from  150  to  160  million  francs 
a  year.  There  are  5  societies  of  over  10,000  members.  The 
Lucerne  Society  has  almost  12,000  members,  the  Berne 
Society  13,000  members,  the  Zurich  Union  has  34  societies 
as  members  and  the  wonderful  Basle  District  Society  has 
37,000  members,  which  counting  the  families,  means  al- 
most the  total  population  of  the  district.  It  employs  1,141 
persons.  Swiss  agriculture  is  saturated  with  co-operation. 
Most  interesting,  too,  is  the  fact  that  the  University  of 
Zurich  has  special  lectures  on  co-operation  and  plans  for 
the  education  of  managers  and  officials  of  co-operative  so- 
cieties. In  the  decade  following  1904  the  movement  tripled 
its  effects  and  quadrupled  its  sales  in  Switzerland,  and 
welded  together  the  purchasing  power  of  250,000  families. 

Denmark  and  Ireland  are  the  two  lands  which  owe  their 
rebirth  to  another  form  of  co-operation.  Co-operation 
started  in  1866  in  Denmark,  when  that  country  Denmark  and 
was  faced  with  ruin  after  its  destructive  war  agricultural 
with  Prussia,  but  it  was  not  until  1882  that  the  *=o-op^^^^o° 
idea  was  applied  to  the  dairy  business.  The  idea  spread 
throughout  rural  Denmark  and  federated  the  dairies  mto 
a  great  and  effective  enterprise  that  captured  the  English 
markets  for  its  products.  For  the  first  decade  and  a  half 
of  its  history  but  ten  new  societies  a  year  were  organized, 
but  the  added  momentum  of  later  years  gave  Denmark  1,562 
societies  by  1914.  As  these  are  mainly  rural  their  average 
membership  is  but  156,  but  a  quarter  of  a  million  members 
in  a  country  of  about  three  million  people  means  a  country 
where  co-operation  has  become  a  factor  in  the  lives  of  well- 
nigh  a  majority  of  the  people.  The  Danes  by  the  wonderful 
organization  of  their  co-operative  dairies  sell  England  five 
times  the  butter  France  does  and  export  it  to  the  most 
remote  lands.  In  the  first  twenty  years  after  the  first  co- 
operative dairy  was  started  the  Danish  butter  trade  in- 
creased nine-fold.     Co-operative  egg  societies,^  which  in- 

^  Every  farmer  has  ever>'  egg  marked  with  his  number  and  he  is  pun- 
ished for  sending  stale  or  dirty  eggs  to  market.  The  eggs  are  sorted 
as  to  weight  and  their  freshness  guaranteed. 


242         CO-OPERATION   THE   HOPE   OF  THE   CONSUMER 

cidentally  improve  the  strains  of  poultry,  co-operative 
manure  societies  for  the  common  purchase  of  fertilizers, 
co-operative  slaughter  houses,  which  killed  two  million  pigs 
in  1913/  co-operative  feeding-stuff  societies,  co-operative 
timber  societies  and  hundreds  of  co-operative  farms,  are 
some  of  the  developments.  The  Danish  wholesale  with 
various  branches  does  its  own  coffee  roasting,  has  a  choc- 
olate factory,  a  rope  factory,  a  soap  and  chemical  one,  a 
margarine  one,  a  stocking  factory,  a  cartwheel  factory,  a 
ladies'  and  gentlemen's  clothing  factory  and  a  cement  fac- 
tory which  it  established  to  fight  a  cement  trust.  A  co- 
operative coal  society  has  five  depots  and  a  co-operative 
bank  started  after  the  war  began  had  a  turnover  of  thirty 
million  francs  in  its  first  three  months  and  in  19 13  opened 
five  branches.  A  thousand  of  the  co-operative  societies 
with  almost  two  hundred  thousand  members  maintain  a 
co-operative  sanitorium.  The  development  of  co-operative 
distribution  in  the  Danish  cities  has  come  later,  starting 
only  with  the  century,  but  92  societies  were  in  existence  in 
August,  191 7,  and  a  federation  had  been  formed.  Modern 
Denmark  is  in  large  measure  a  product  of  co-operation.  It  is 
a  co-operative  nation. 

Sweden  felt  the  impulse  of  the  British  success  early  and 
in  the  late  sixties  a  large  number  of  societies  were  started. 
Sweden  Many  were  unsuccessful  but  in  1899  a  union  was 

formed  and  a  wholesale  was  started  unsuccessfully  in  1901, 
but  successfully  established  three  years  later.  By  1915 
Sweden  had  over  seven  hundred  co-operative  societies  with 
185,000  members.  The  movement  reversed  the  Danish 
history  and  began  among  the  industrial  workers,  spreading 
later  to  the  agriculturalists.  The  story  of  the  successful 
struggles  with  the  great  Swedish  trusts  has  been  told  in 
another  chapter.     It  is  one  of  the  illuminating  and  pro- 

1  The  first  co-operative  bacon  factory  was  started  in  1888  and 
23,400  pigs  were  killed.  In  1906  1,051,358  were  killed.  The  large 
increase  in  so  short  a  time  was  entirely  due  to  the  system  of  co- 
operation which  spread  like  a  network  all  over  the  country. 
T.  O'Donnell:  A  Trip  to  Denmark. 


EUROPE   AND   BEYOND  243 

phetic  episodes  of  co-operative  history.  The  yearly  turn- 
over of  the  societies  was  forty  million  crowns  in  19 14  and  a 
public  investigation  recently  made  showed  that  prices  had 
increased  least  where  the  co-operative  idea  had  a  foothold. 

Norway  had  a  union  of  206  societies  in  19 16  and  these  had 
a  tobacco  factory,  a  margarine  factory  and  a  coffee  roasting 
plant  and  were  considering  establishing  a  pen-  Norway 
sion  fund,  a  banking  department  and  a  fire  insurance  society. 
There  was  also  a  union  of  789  co-operative  agricultural 
societies  which  supplied  fertilizers  and  fodder,  seeds  and 
farm  machinery  to  their  members.  They  had  a  seed  cleaning 
department  and  a  mill  and  machinery  department.  A  co- 
operative wholesale,  co-operative  bakery,  co-operative 
sausage  factory  and  co-operative  butter  factory  are  re- 
ported. The  Christiania  society  runs  fourteen  groceries  and 
three  dairies. 

Holland  has  both  distributive  and  agricultural  co-opera- 
tion well  developed.  One  hundred  and  thirty-five  distrib- 
utive societies  with  108,000  members  have  a  HoUand 
strong  wholesale  with  a  banking  department  and  a  complete 
system  of  co-operative  education  and  a  turnover  in  19 16  by 
the  wholesale  of  6}i  million  florins.  It  is  a  strong,  sub- 
stantial, growing  movement. 

Step  by  step  the  development  of  co-operative  history  has 
shown  wider  possibilities  in  its  application.  Distributive 
co-operation  makes  the  consumer  his  own  mer-  ^  unique 
chant  and  eliminates  the  profiteers  in  the  form  form  of  co- 
of  retailers  and  wholesalers  and  middlemen  and  °^^^^  '°° 
ultimately  the  manufacturers.  Productive  co-operation 
attacks  the  middleman  from  the  other  direction  and  makes 
the  laborer  his  own  employer  and  his  own  capitalist. 
Agricultural  co-operation,  which  is  a  form  of  producti\e 
co-operation,  makes  the  farmer  his  own  shipper  and  commis- 
sion merchant  and  the  manufacturer  in  dairies  and  cream- 
eries and  cheese  factories,  of  his  own  raw  materials.  The 
agricultural  co-operation  which  consists  in  the  co-operative 
bu}dng  of  fertilizers  and  farm  machinery  is  a  form  of  dis- 
tributive  co-operation.      Co-operative   credit   makes   the 


244        CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

borrower  his  own  banker  and  eliminates  most  of  the  profits 
that  go  to  alien  capital.  It  remained  for  Italy  to  develop 
yet  another  form  of  co-operation  and  reverse  the  usual  pro- 
cedure whereby  capital  hires  labor.  Labor  engaged  in 
public  works,  which  are  not  marketable  commodities,  had 
not  been  able  to  co-operate  as  such  under  any  of  the  other 
forms  of  co-operation.  But  Italy  showed  how  labor  in  these 
fields  might  co-operatively  hire  capital  and  engineering 
skill  and  even  management. 

This  unique  contribution  to  co-operation  Italy  made  in 
the  co-operative  labor  group,  the  "Societa  di  Lavoro." 
Italy  and  co-  These  workmen's  co-operative  societies  are  con- 
operative  tractors  for  their  own  labor  and  undertake  large 
labor  societies  p^j^jj^,  g^^^  private  contracts  such  as  the  building 
of  railways,  roads  and  canals.  To  these  societies  of  brac- 
cianti  (navvies),  muratori  (masons  and  bricklayers)  stiv- 
atori  (stevedores)  and  other  laborers,  or  co-operative  work 
societies,  the  workingmen  do  not  subscribe  much  capital 
but  give  their  work  and  with  this  and  the  strong  social  feel- 
ing that  holds  them  together  they  reclaim  marsh  lands, 
construct  irrigation  works  and  all  kinds  of  public  works. 
The  Italian  government,  after  its  conquest  of  TripoH, 
turned  to  these  societies  for  the  opening  up  of  that  land  by 
the  building  of  roads  and  railroads  and  necessary  public 
works.  Among  these  co-operative  laborers'  associations 
and  associations  of  builders  which  are  to  be  found  mainly 
in  northern  Italy  are  societies  of  bricklayers,  stone-masons, 
artisans  and  laborers,  porters,  shiploaders  and  others  who 
undertake  contracts,  hire  their  engineers,  buy  their  mate- 
rials, and  have  their  own  banks.  But  all  forms  of  co- 
operation have  taken  root  in  Italy.  In  191 5  there  were 
7,996  co-operative  societies  of  which  2,283  were  distributive, 
1,317  agricultural,  2,086  the  work  societies  just  described, 
and  106  co-operative  fishing  societies.  Of  the  5,036  that 
reported,  the  trade  was  almost  £26,000,000.  The  societies 
had  numbered  but  5,064  in  1910.  The  Italian  wholesale 
had  sales  of  £2,450,000  in  1913  and  £3,240,000  in  1916.  The 
large  Co-operative  Union  in  Milan  had  sales  in  19 16  of 


EUROPE  AND   BEYOND  245 

almost  24  million  lire  as  against  15  million  in  191 5.  Co- 
operative building  and  co-operative  insurance  societies  are 
common  and  in  Lombardy,  Sicily  and  Emilia  there  are 
collective  farming  societies.  These  last  manufacture  their 
own  fertilizers  and  have  their  mutual  banks  and  farms  and 
market  gardens. 

Spain  represents  a  less  developed  stage  of  the  movement. 
The  first  societies  started  about  i860,  the  industrial  province 
of  Catalonia  taking  the  lead,  but  the  growth  has  Spain 
been  slow.  The  Spanish  government  has  encouraged  the 
formation  of  societies,  but  the  individualistic  spirit  of  the 
people  and  their  lack  of  education  have  delayed  the  develop- 
ment. But  there  were  931  societies  known  in  1914  and  their 
membership  was  estimated  to  be  about  570,000  and  their 
trade  about  forty-five  million  dollars  and  the  movement  is 
beginning  to  be  important.  Obviously  not  included  in  the 
above  is  the  important  Society  Flor  de  Mayo  (Mayflower) 
in  Barcelona  which  has  a  million  members,  owns  five  build- 
ings and  has  its  own  farm  with  accommodations  for  sixty 
famihes.  Like  the  Belgian  societies  this  keeps  part  of  the 
dividends  for  social  work,  schools,  old  age  pensions,  etc. 

Austria  was  among  the  last  of  the  great  European  coun- 
tries to  develop  co-operation.  It  began  in  1867  but  Httle 
was  accompKshed  until  after  1890  and  it  was  Austria 
not  until  the  opposition  of  the  active  lower  middle  class 
aroused  the  workers  that  the  movement,  about  the  begin- 
ning of  the  century,  made  rapid  progress.  The  Central 
Union  of  Austrian  Distributive  Societies  was  estabUshcd  in 
1902  and  the  Wholesale  in  1905,  but  the  period  was  one  of 
over-development  and  a  reaction  follovved  during  the  eco- 
nomic crisis  which  came  during  the  Balkan  Wars.  There 
were  19,296  co-operative  societies  in  Austria  in  1915, 
three-fifths  of  which  were  credit  societies.  The  union  of 
distributive  societies  had  476  societies  affiliated  in  1916 
with  over  300,000  members.  The  powerful  Vienna  dis- 
tributive society  had  a  membership  in  19 15  of  59,000  mem- 
bers and  a  trade  of  24  miUion  crowns.  The  war  has 
seen  the  formation  of  the  great  VictualHng  Union  of  War 


246         CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

Workers  established  in  1916,  a  vast  co-operative  society  of 
the  employees  of  various  industrial  enterprises,  and  the 
Wholesale  of  the  Austrian  Distributive  Societies.  This 
includes  400  industrial  estabHshments  with  200,000  mem- 
bers and  the  distributive  societies  and  union  provide  for 
575,000  people  in  Vienna  co-operatively — one-fourth  of 
the  population  or,  with  the  soldiers  away,  one-third  of 
it.  There  is  a  like  organization  in  Bohemia  and  in  Lower 
Austria  a  miUion  war  workers  are  drawing  suppUes  from  the 
distributive  co-operative  societies. 

Hungary  had  8,189  co-operative  societies  at  the  end  of 
1913,  230  of  which  were  in  Buda-Pest  and  1,169  i^  Croatia 
Hungary  and  Slavonia.  These  were  largely  cattle  in- 
surance societies,  credit  societies  and  distributive  societies. 
The  Hungarian  Wholesale  Society,  Hangya,  is  the  sixth 
largest  wholesale  and  in  19 13  it  had  a  turnover  of  $8,000,000. 
Hungary  has  1,386  affiliated  co-operative  distributive 
societies.  The  number  of  consumers  affiliated  was  952,775 
in  1915  and  1,649,381  in  1916,  a  70%  gain.  Eighty-two 
new  societies  were  formed  in  1916.  The  turnover  in  1914 
was  thirty  million  crowns,  in  1915  forty-six  million,  in  1916 
fifty-seven  and  a  half  million.  The  Hungarian  Railway 
Employees  have  a  strong  distributive  union  which  at  the 
end  of  19 16  had  48,768  members  and  almost  doubled  in 
that  year  the  trade  of  the  previous  year  and  is  planning  to 
erect  a  bakery,  a  soap  and  an  ice  factory. 

The  effect  of  the  war  can  be  traced  in  most  of  the  par- 
agraphs of  this  chapter.  The  era  of  high  prices  has  com- 
The  effect  of  pelled  thrift  and  forced  people  to  co-operate, 
the  war  'pj^g  logic  of  co-operation  is  well-nigh  universally 

admitted,  almost  without  argument,  but  inertia  and  lack 
of  initiative  and  easy-going  thriftlessness  do  not  lend  them- 
selves to  the  task  of  organization  and  education  in  days  of 
prosperity.  But  the  spirit  of  necessity  accomplishes  mir- 
acles. The  Great  War  marks  an  epoch  of  great  and  rapid 
development  for  co-operation. 

Finland  started  in  1889  her  first  society  but  the  next  dec- 
ade saw  hardly  a  dozen  in  all.    The  founding  in  1895  of  the 


EUROPE   AND   BEYOND  247 

Society  Pellervo,  the  Society  for  the  Propagation  of  Rural 
Co-operation  in  Finland,  gave  a  great  impetus  and  by 
1915,  with  its  2,300  societies  for  a  population  of  Finland 
three  million,  a  society  for  every  fourteen  hundred  inhab- 
itants, Finland  had  become  the  fourth  largest  co-operative 
land.  Switzerland  has  one  co-operative  society  for  every 
500  inhabitants,  Denmark  one  for  every  600  and  Sweden 
one  for  every  1,100.  The  turnover  of  the  Finnish  societies 
in  1914  was  £2,500,000.  There  are  490  stores  with  130,000 
members,  the  largest  of  which  is  in  Helsingfors  and  has- 
12,500  members.  The  Finnish  Wholesale  has  just  purchased 
a  large  estate  on  which  to  erect  its  future  factories.  It  al- 
ready owns  match  and  broom  factories,  a  box  factory  and 
one  for  preserving  berries.  This  unusual  estate  not  only 
has  the  land  to  raise  the  agricultural  products  for  the  Whole- 
sale, but  has  a  waterfall  to  supply  the  power  for  the  fac- 
tories. 

Poland  established  a  society  as  early  as  1869,  but  it  was 
not  until  after  the  Russian  Revolution  in  1905  that  the 
people  turned  to  co-operation.  Then  there  were  Poland 
285  societies  affiliated  with  the  Union  of  Distributive 
Societies  in  Warsaw  and  259  not  affiliated.  By  the  end  of 
1 9 13  the  peasants  had  founded  a  thousand  distributive 
societies  and  in  the  face  of  the  war  this  war-swept  land  had 
at  the  end  of  19 16  1,500  societies  with  a  membership  ex- 
ceeding 120,000.  And  in  addition  there  are  co-operative 
agricultural  societies,  co-operative  dair>'-  and  butter  soci- 
eties, co-operative  credit  and  production  societies  and  the 
idea  has  spread  remarkably. 

The  Balkan  States  have  been  swept  into  the  mighty  cur- 
rent. In  December,  1913,  Roumania  had  3,000  co-operative 
societies  with  a  membership  of  450,000.  Every  Balkan  states 
thirteenth  Roumanian  was  a  co-operator.  Roumania  or- 
ganized its  first  co-operative  credit  society  in  1891.  By 
1900  it  had  but  44.  In  1909  these  had  increased  to  2,410 
societies  and  in  191 1  to  2,750.  The  membership  grew  from 
59,618  in  1902  to  510,118  in  191 1  and  90  per  cent  of  this 
membership  were  peasants,  3,823  were  priests,  4,801  school- 


248         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

masters  and  9,253  small  tradesmen.  More  than  250,000 
members  could  neither  read  or  write.  ^  Two  hundred  and 
ten  of  the  Roumanian  societies  were  distributive,  18  were 
bakeries  and  378  were  collective  farms,  the  latter  forming  a 
characteristic  feature  of  Roumanian  co-operation.  These 
figures  are  for  191 1.  In  191 2  the  co-operative  Farm  Ten- 
ancy Societies  and  the  Foresters'  Associations,  in  which 
form  of  co-operation  Roumania  may  be  said  to  lead  the 
world,  had  increased  to  487.  These  had  65,000  members  and 
rented  369,922  hectares  of  land.  Tenant  farmers  have  stood 
between  the  landowners  and  the  agricultural  laborers  but 
this  new  development  is  eliminating  these  middlemen.  In 
Serbia  there  were  1,200  societies.  A  majority  of  these  soci- 
eties were  credit  and  agricultural  societies,  but  Serbia  had 
100  Rochdale  societies  ^  and  Roumania  had  a  few  co- 
operative bakeries.  Serbia  was  about  to  create  a  school  to 
teach  co-operation  when  the  war  broke  out. 

Greece  is  just  beginning  her  co-operative  history.  In 
January,  1917,  Greece  had  87  co-operative  societies,  of 
Greece  which  6 1  were  credit  societies  and  i8  agricul- 

tural; of  the  latter  ii  being  currant  societies,  one  an  olive 
oil  society  and  four  societies  of  vintners. 

The  Island  of  Cyprus  established  a  co-operative  credit 
Cyprus  society  in  1899  in  the  capital  and  soon  there 

were  like  societies  in  all  the  towns  and  in  fifty  of  the  villages. 

The  Turkish  government  in  1914  sent  a  students'  Com- 
mission to  Roumania,  Hungary  and  Bulgaria  to  study  the 
Turkey  co-operative  movement  in  those  countries  as 

leading  opinion  realized  the  need,  in  furthering  economic 
life,  of  credit,  distributive  and  sale  societies.  As  a  result  of 
the  report  of  this  commission,  the  government  undertook 
to  draft  a  co-operative  law  whose  enactment  is  assured. 

1  Co-operation — Comparative  Studies.  H.  S.  Crosthwaite  (A  Study 
oj  Co-operation  in  India). 

"Le  Mouvcment  Co-opcratif  en  Roumaine,"  byDr.  J.N.  Angelescu. 
Quoted  in  Bulletin  of  Co-operative  Reference  Library,  Dublin,  for 
Feb.,  1915. 

*  H.  J.  May:  The  International  Co-operative  Alliance  and  the  War. 


EUROPE   AND   BEYOND  249 

Thus  has  the  movement  spread  across  Europe  from  end 
to  end,  from  west  to  east  and  from  north  to  south.  It  has 
flourished  under  different  forms  of  government  ^he  contribu- 
and  among  the  most  diverse  peoples  and  cul-  tions  of  the 
tures.  Each  land  has  made  its  own  contri-  °^ 
bution.  England  originated  and  developed  co-operative 
distribution,  Germany  co-operative  credit,  France  and  Bel- 
gium co-operative  production,  Denmark  and  Ireland  co- 
operative agriculture,  Italy  co-operative  labor.  But  in 
every  case  the  adoption  of  one  form  of  co-operation  has  led 
in  time  to  the  adoption  of  the  other  fonns. 

The  best  available  statistical  summary  of  the  movement 
in  Europe  is  to  be  found  in  the  third  edition  of  Prof.  Charles 
Gide's  book,  Lcs  Socictcs  Co-operatives  de  Con-  Co-operative 
sommalion,  bearing   the  date  of   1917.     Prof.  ti,^^'E^%l 
Gide  has  compiled  these  figures  from  the  co-  today 
operative  journals  of  various  lands.    The  third  column  is  the 
number  of  co-operators  multiplied  by  four  as  each  represents 
a  family,  there  being  one  member  per  family.    These  are 
the  figures  for  distributive  co-operative  societies  alone  and 
do  not  include  other  forms  of  co-operation.    They  represent 
the  year  19 14,  since  wliich  time  there  has  been  a  remarkable 
growth. 

Prof.  Gide  says  that  in  practically  every  land  the  war 
has  seen  an  increase  in  the  membership  of  co-operative 
societies,  belligerent  and  neutral,  an  increase  The    world 
notable   ever>'^vhere  but   enormous   in   Russia  co-op?rative 
and  Denmark.    He  adds  that  if  to  his  table  be  distribution 
added   the   Balkan   States,   Portugal,   the  United   States, 
Canada,  Japan,  the  Cape,^  India  and  the  West  Indies,  there 
would  be  30,000  more  societies  with  ten  million  members, 
each  representing  a  family,  and  with  sales  of  five  milliards  of 
francs.    This  means  that  a  population  of  from  forty  to  fifty 
millions  of  people  are  actively  interested  in  distributive 
co-operation  and  these  figures  do  not  include  building  and 
loan,  agricultural,  credit  and  productive  co-operative  soci- 

1  Report  of  Select  Committee  on  Co-operation  in  Cape  of  Good 
Hope  issued  in  1907  contains  522  pav^cs. 


250         CO-OPERATION   THE  HOPE   OF   THE   CONStJMER 


eties  and  there  are  more  than  ten  thousand  of  the  first  in 
the  United  States  alone,  at  least  twenty  thousand  of  the 
second  in  the  world,  50,000  to  60,000  of  the  third  and  30,000 
largely  creameries,  of  the  last.  These  colossal  figures  give 
some  idea  of  the  vast  extent  of  the  movement  and  the  rapid 
growth  of  the  Co-operative  Commonwealth. 


Land 


Number  of 
Societies 


rE   bOCIETIES 

1914 

Number  of 

Number  of 

Co-operators 

Sales  in 

Members  by 

in  Each 

Millions 

Thousands 

Thousand 
Inhabitants 

of  Francs 

3,054 

264 

2,200 

2,000? 

121 

7CX3? 

1,500 

34 

800 

881 

90 

321 

500? 

70 

180? 

450? 

SI 

170? 

276 

290 

144 

250 

350 

ISO 

200? 

40 

80? 

170 

90 

48 

153 

108 

61 

108 

72 

26 

100 

120 

63 

96 

33 

42 

40 

30 

16? 

39 

42 

23 

British  Isles 1,385 

Germany 2,375 

Russia 13,000 

France 3)26i 

Austria 1,471 

Italy 2,283 

Switzerland 396 

Denmark 1,560 

Hungary 1,750 

Belgium 205 

Sweden 608 

Holland 135 

Finland 512 

Poland 950 

Spain 200 

Norway 172 

Another  of  Prof.  Gide's  tables  is  of  interest.    The  average 
purchases  per  member  in  francs  per  year  is — 

England 730 

Finland 630 

Denmark 600 

Switzerland 522 

Germany 384 

France 365 

There   are    twenty-four   wholesales    scattered   all   over 
Europe.     Five  of  these  have  an  annual  business  of  over 


EUROPE  AND   BEYOND 


251 


$40,000,000. 

1916  was: 


The  trade  done  by  the  wholesale  societies  in 


IQld 


igiS 

Increase  per 

cent  over  igis 

£43,101,747 

2V/t 

£11,363,075 

27.6 

868,600,000  crs. 

24.8 

50,193,161  frcs. 

48.75 

28,928,296  crs. 

73.16 

35,098,521  Fin.mks. 

105.6 

6,236,095  flrs. 

44 

16,497,640  crs. 

29.92 

4,457,880  crs. 

35.1 

2,450,000  lire 

32.20 

152,858,636  marks 

12  41  (decrease) 

22,000,000  roubles 

266.22 

C.  VV.  S.  Manchester £52,230,074 

S.  C.  VV.  S.  Glasgow £14,499,037 

F.  O.  B.  Copenhagen 1,082,700,000  crs. 

V.  S.  K.  Basle 74,658,943  frcs. 

G.  E.  G.  Vienna 50,092,772  crs. 

S.  O.  K.  Helsingfors 72,160,139  Fin.  mks. 

Handelskamcr  Rotterdam.         8,977,305  flrs. 

K.  F.  Stockholm 22,013,232  crs. 

N.  K.  L.  Chrisliania 6.021,135  crs. 

C.  I.  Milan 3,240,000  lire 

G.  E.  G.  Hamburg 133,896.014  marks 

S.  P.  O.  Moscow 87,000,000  roubles 


The  Rochdale  seed  has  proved  to  be  adapted  with  slight 
modifications  to  all  lands.  In  most  European  countries  the 
movement  has  doubled  every  ten  years.  It  is  a  growing 
now  passing  in  some  lands  from  a  large  minority  power 
movement  to  the  enlistment  of  a  majority  of  the  total 
population.  In  many  sections  it  is  a  majority.  Prof.  James 
Ford  of  Harvard  estimated  in  a  speech  in  191 7  that  there 
were  10,000,000  stockholders  in  co-operative  associations, 
3,000,000  of  whom  own  stock  in  distributive  associations 
in  Great  Britain  and  seven  million  in  like  associations  on 
the  continent. 

The  great  International  Co-operative  Alliance  which  is 
the  federation  of  the  national  groups,  has  twenty-four  na- 
tional units  and  is  the  largest  of  all  non-official  world  federa- 
tions and  according  to  John  Graham  Brooks  in  T/ic  New 
Republic,  this  represents  130,000  societies  with  20,000,000 
family  members  who  in  turn  represent  three  or  four  times 
that  number  of  people.  The  Alliance  is  supported  by  sub- 
scriptions from  the  following  lands  named  in  the  order  of  the 
size  of  those  subscriptions;  Great  Britain,  Germany,  Austria, 
Switzerland,  France,  Hungary,  Belgium,  Finland,  Den- 
mark, Russia,  Italy,  Holland,  Sweden,  Norway,  Roumania, 
Serbia,  India,  United  States,  Spain,  Canada,  Argentina, 
Cyprus,  Japan  and  Bulgaria. 

No  account  of  the  movement  would  be  complete  that 
failed  to  record  its  extension  beyond  Europe.  Asia  promises 
to  be  the  field  of  its  next  triumphs  if  America  remains 


252         CO-OPERATION   THE  HOPE   OF  THE   CONSUMER 

blind  and  indifferent,  or  at  most  lukewarm  to  this  master 
builder.    The  Russian  movement  is  creeping  into  Siberia. 

Siberia  A  Siberian  Union  of  Butter  Making  Artels  was 
formed  in  1908  and  has  550  separate  organizations  and  an 
annual  business  of  eight  miUion  dollars.  More  than  half 
of  all  Siberian  butter  is  made  by  the  co-operative  associa- 
tions. And  co-operating  associations  for  purchasing  farm 
implements  and  machinery  and  for  selling  produce  are  mul- 
tiplying, and  co-operative  elevators  and  flour  mills  are  be- 
ginning to  be  built.  The  union  of  butter  artels  exported 
8,000  tons  of  butter  in  a  recent  year  to  England,  Germany 
and  other  countries.  It  has  its  own  selling  company  in 
London  with  branches  in  Berlin,  Hamburg,  Copenhagen, 
etc.  In  all  Western  Siberia  there  are  2,550  co-operative 
creameries.  The  vast  organization  of  the  Siberian  Union 
stretches  1,500  miles  in  Siberian  territory  on  both  sides  of  the 
railway  line.  It  is  managed  on  thoroughly  democratic 
lines. 

The  Indian  government  made  extensive  studies  in  Europe 
of  co-operation,  passed  necessary  laws  and  started  a  move- 
India  ment  for  co-operative  credit  to  provide  capital 
for  agriculture.  It  was  a  governmental  and  not  in  its  incep- 
tion a  popular  movement,  but  it  has  laid  hold  of  the  imagina- 
tion of  the  people.  The  Bhic  Book  for  June,  1916,  shows 
18,000  agricultural  societies  with  700,000  members  and  1,000 
non-agricultural  societies  and  600  federations.  The  average 
capital  per  member  is  now  almost  £5  and  the  training  in 
self-help,  discipline  and  organization  is  regenerative.  It  is 
spreading  to  other  fields.  The  system  is  the  Raiffeisen  sys- 
tem and  its  growth  is  shown  by  contrasting  the  figures  above 
with  those  of  1907  when  there  were  843  societies  with  90,000 
members  and  191 5  when  there  were  17,327  societies.  The 
total  capital  in  1915  was  £6,000,000.  Bengal  in  June,  1916, 
reported  2,243  societies  with  122,000  members  and  these 
were  not  only  credit  societies  but  agricultural  (other  than 
credit),  weaving,  fishermen's,  dairying  and  sugar  manufac- 
turing. 

British  Burma  had  in  19 14  976  rural  credit  societies  with 


EUROPE  AND   BEYOND  253 

24,000  members  and  770  co-operative  societies  federated 
in  67   unions.     There  are  57   cattle-insurance       Burma 
societies,  9  sales  societies,  7  silk-weaving  societies. 

Alert  Japan  sent  a  government  representative  to  Great 
Britain  and  Germany  in  191 1  to  study  the  movement  al- 
ready under  way  in  Japan.  It  is  distinctly  Japan 
favorable  to  its  adoption.  Co-operation  is  very  young  in 
this  land  ^  but  in  1912  it  reported  9,394  societies  having 
increased  1,074  societies  each  of  the  last  three  years.  It  had 
76  co-operative  societies  for  every  hundred  cities,  villages 
and  hamlets.  There  were  980,000  members,  70  per  cent  of 
all  the  Japanese  cattle  belonged  to  members  of  co-operative 
societies  for  the  improvement  of  live  stock,  one  of  which 
societies  had  38,000  members.  Although  modern  co-opera- 
tion is  only  about  ten  years  old  in  Japan,  it  is  growing  more 
rapidly  and  constantly  than  in  any  other  country,  with  the 
possible  exception  of  Russia. 

The  Zionist  colonies  in  Palestine  in  the  stress  of  war  are 
organizing  co-operatively  for  very  life.  From  Iceland  and 
Labrador  where  Dr.  Grenfell  has  introduced  co-  other  lands 
operation,  to  the  islands  of  the  Pacific  the  great  current 
flows  on.  In  the  Island  of  Java  it  is  starting.  Buenos  Ayrcs, 
the  capital  of  Argentina,  founded  a  strong  society  in  1905 
and  by  1906  this  had  a  membership  of  over  3,000  and  a 
paid-up  capital  of  884,462  pesos.  It  had  three  depart- 
ments, credit,  building  and  distribution.  It  had  erected 
163  houses  and  the  turnover  of  the  distributive  for  half  a 
year  was  almost  120,000  pesos.  In  Antigua  in  the  West 
Indies  a  strong  tendency  toward  co-operation  has  become 
manifest.    Sugar  manufacturing  has  one  notable  co-opera- 

1  In  its  modem  form.  Some  still  flourishing  societies  for  the  co- 
operative sale  of  silk  trace  their  history  back  240  years.  "Here  we 
can  see  the  spirit  of  co-operation  moulding  a  nation's  destiny;  and  it 
is  in  the  active  working  of  that  spirit  just  where  it  is  really  wanted,  in 
the  village  itself,  at  the  ver>'  root  of  the  co-operative  tree,  that  ac- 
counts for  the  wonderful  progress  made  by  the  co-operative  move- 
ment in  Japan."  Co-operation:  Comparative  Studies,  H.  R.  Crosth- 
waite,  Calcutta,  page  140. 


254         CO-OPERATION   THE  HOPE   OF   THE   CONSUMER 

tive  success  there  and  an  onion  growers'  association  is 
being  followed  by  a  cotton  growers'  and  a  lime  growers' 
association.  This  impulse  has  led  to  like  undertakings  in 
St.  Kitts,  in  Montserrat,  the  Virgin  Islands  and  Nevis. 
Australia  reports  many  successful  stores  and  other  co- 
operative enterprises.  The  Adelaide  Society  started  in  1868 
with  nine  members  and  a  capital  of  £5  and  a  first  week's 
trade  of  seven  shillings,  six  pence  and  by  191 2  it  had  a  trade 
of  £100,000  per  annum.  Melbourne  has  a  co-operative 
fishermen's  association  which  handles  fifty  per  cent  of  all 
the  fish  in  that  market.  South  AustraHa,  Queensland, 
Victoria  and  New  South  Wales  all  have  well  established 
undertakings  and  Tasmania  is  starting.  What  began  at 
Rochdale  has  reached  Kurri  Kurri  and  Murwillumbah. 

And  the  progress  of  the  movement  is  not  only  geograph- 
ical, from  land  to  land  and  from  continent  to  continent,  but 
Reaching  new  it  has  begun  to  spread  from  class  to  class,  from 
classes  ^^^^  industrial  classes  to  the  agricultural  and. 

vice  versa,  and  from  the  laborers  to  the  lower  middle  class. 
A  study  of  the  orientation  of  the  entire  field  of  co-operation 
by  C.  R.  Fay  in  his  Co-operation  at  Home  and  Abroad  shows 
at  a  glance  its  main  developments.  His  four  main  divisions 
are  (i)  banks,  (2)  agricultural  societies,  (3)  workers'  socie- 
eties  and  (4)  stores.  The  banks  or  credit  unions  are  the 
town  banks  and  the  country  banks  and  their  federations. 
The  agricultural  societies  are  first  those  for  co-operative 
supply,  then  those  for  co-operative  production  in  which 
field  the  dairies  are  most  successful  with  cheese  factories 
and  bacon  factories  next  in  importance  and  thirdly  those 
for  co-operative  sale  such  as  the  egg-selling  societies,  the 
German  corn  societies  and  the  fruit-selling  organizations. 
The  workers'  societies  in  Great  Britain  and  especially  in 
France  and  Belgium  represent  co-operative  production  or 
labor  co-partnership,  largely  in  various  forms  of  factory 
work.  Italy  has  developed  a  new  form  of  workers'  societies 
in  the  groups  of  laborers  outside  the  factories.  It  is  the  con- 
clusion of  Mr.  Fay  that  the  greatest  opportunity  lies  before 
the  agricultural  societies  and  the  stores.     "We  have  left, 


EUROPE  AND  BEYOND  255 

as  the  most  comprehensive  and  unlimited  provinces  of  co- 
operation, the  association  of  agricultural  producers  in  all 
its  forms  on  the  one  hand  and  the  association  of  consumers 
on  the  other."  ^  The  limits  of  co-operation  were  clearly 
defined  by  Beatrice  Potter  who  showed  that  it  could  not 
spread  below  the  thrift  line  or  above  it.  "Poverty  and 
irregular  habits  form  a  lower  limit  to  the  growth  of  co- 
operation. Fastidiousness  and  the  indifference  bred  of 
luxury  constitute  a  higher  line  to  the  desire  or  capacity  for 
democratic  self-government.  To  bring  the  great  bulk  of 
the  middle  and  upper  class  expenditure  within  the  jurisdic- 
tion of  the  co-operative  movement  we  should  be  forced  to 
impose  a  graduated  income  tax  amounting  to  something 
like  twenty  shillings  in  the  pound  on  all  incomes  over 
£400  a  year."  But  many  measures  of  social  amelioration 
tend  to  bring  those  who  were  below  the  poverty  line  above 
it,  and  the  tendency  of  inheritance  and  income  taxes  and 
especially  of  war  taxation,  and  increased  prices  and  the 
higher  cost  of  living  is  to  make  thrift  a  necessity  or  at  least 
a  social  obligation  to  many  who  before  were  reckless.  This 
tends  to  increase  co-operative  territory.  Its  students  say 
it  is  spreading  up  and  spreading  down  as  well  as  spreading 
afar.  When  mankind  begins  to  make  real  progress  on  its 
next  great  problem,  that  of  the  just  distribution  of  wealth, 
giving  more  to  those  who  have  too  little,  and  less  to  those 
who  have  too  much,  every  step  will  prepare  the  way  for 
more  co-operation. 

A  survey  of  its  triumphant  march  is  inspiriting  to  those 
who  believe  it  is  the  long  sought  panacea  of  widest  applic- 
ability and  greatest  promise.  Its  beginnings  in  Retrospect 
almost  every  land  have  been  humble  and  un-  *°"*  prospect 
noticed.  It  has  a  record  of  initial  failure  where  the  ground 
was  not  yet  ready,  but  its  roots  spread  silently  in  the  soil 
and,  in  the  fullness  of  time,  land  after  land  has  witnessed  a 
period  of  rapid  development.  It  may  well  be  that  it  must 
be  reconceived  to  meet  the  new  occasions  of  changing  times. 

^Fay:  Co-operation  at  Home  and  Abroad.     P.  S.  King  and  Son. 
London,  1908.    See  mainly  table  of  contents,  also  Introduction. 


256         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

Its  technique  may  not  be  perfect.  But  a  movement  which 
has  so  marvellously  adjusted  itself  to  the  diverse  needs  of 
widely  different  classes  and  nations  will  adapt  itself  to  each 
decade  and  each  generation.  Its  foundation  principle  of 
democracy  and  mutuality,  of  working  together  and  sharing 
justly  and  fully  is  builded  on  a  rock.  Everything  that  makes 
for  economy,  justice,  for  mutual  aid,  for  the  moraHzation 
of  society  works  for  co-operation.  To  endeavor  to  record 
its  progress  is  like  trying  to  write  upon  a  flowing  river.  One 
cannot  say,  "Lo!  here!"  or  "Lo!  there!"  As  one  records, 
his  very  facts  are  outgrown  and  left  behind.  The  days  just 
before  us  when  the  co-operators  in  land  after  land  will  find 
themselves  a  working  majority  in  their  nation  with  a  closely- 
unified  organization  and  the  skill  and  experience  and  pur- 
pose to  conduct  industry  and  commerce  for  the  people  are 
going  to  be  thrilling  days  for  those  who  watch  and  work. 
And  it  may  well  be  that  America's  hour  is  at  hand  when 
she  too  will  see  and  bear  her  great  part. 

E.  S.  W. 


CHAPTER  XXII 

PLACE  AND  PROGRESS  OF  CO-OPERATIVE 
PRODUCTION 

This  book  is  devoted  to  the  co-operation  of  consumers. 
A  chapter  on  the  co-operation  of  producers,  however,  finds 
place  here  for  two  reasons:  to  call  attention  to  the  influence 
of  the  co-operation  of  producers  on  the  interests  of  con- 
sumers, and  to  point  to  the  success  of  producers'  co- 
operation as  evidence  that  Americans  can  work  together  for 
common  ends  as  they  need  to  do  to  make  co-operation  of 
consumers  successful. 

Both  co-operative  producers  who  sell  together  and  co- 
operative consumers  who  buy  together  aim  at  the  elimina- 
tion of  the  waste  of  the  present  middleman  sys-  purpose   of 
tem.     The  producer  seeks  to  add  the  savings  co-operative 
to  his  income,  while  the  consumers  seek  to  sub-  i""°'^"*^^°° 
tract  these  savings  from  the  costs  of  their  supplies.    Both 
aim  to  remove  the  lost  motion  in  present  distribution  and 
rid  society,  so  far  as  possible,  of  the  uneconomic  influence 
of  an  ahen  interest  operating  between  producer  and  con- 
sumer.   When  consumers  learn  to  manage  the  final  steps  of 
distribution  as  well  as  certain  groups  of  co-operative  pro- 
ducers are  managing  the  initial  steps  of  distribution,  import- 
ant economic  achievements  will  have  been  brought  to  pass. 

Many  kinds  of  producers  co-operate  in  many  ways.  The 
California  Fruit  Growers  Exchange  is  composed  of  6,500  or 
7,000  orange  and  lemon  growers  who,  through  their  or- 
ganization market  over  $27,000,000  worth  of  fruit  per  year. 
On  the  other  hand,  a  co-operative  organization  may  con- 
sist of  a  dozen  neighbors  who  join  to  sell  and  ship  their  eggs 
together.  The  potato  growers  of  Maine,  New  Jersey  and 
other  states  unite  to  market  their  crops,  as  do  the  apple 
growers  of  Oregon,  the  melon  raisers  of  Colorado,  the  cheese 


258         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

makers  of  Minnesota.  Truck  growing  associations,  grain  and 
stock  shipping  associations  in  large  numbers,  handle  their 
output  co-operatively.  It  is  said  that  such  co-operative  mar- 
keting associations  of  fanners  handle  around  $i,400,cx30,ocx) 
worth  of  products  each  year.  There  are  thousands  of  co- 
operative butter  and  cheese  factories  and  grain  elevators. 

The  principles  which  underlie  these  organizations  of 
producers  are  not  unlike  those  of  the  Rochdale  co-operative 
Producers'  organizations  of  consumers.  Each  member 
ganrzed'm°uch  usually  has  but  one  vote,  he  leaves  a  small  mar- 
like  Rochdale  gjn  of  money  with  the  organization  until  the 
socfeu^r  results  of  the  business  are  known,  when  all 
"profits"  are  divided  on  the  basis  of  the  amount  of  each 
member's  produce  shipped  or  business  done  with  the  associa- 
tion. If  the  society  has  capital  stock— as  many,  however, 
do  not— a  dividend  equal  to  interest  is  first  paid  on  stock 
holdings. 

The  advantages  of  shipping  associations  are  many  and 
obvious.  The  first  and  probably  most  important  is  that 
Advantages  of  ^^ey  insure  much  greater  uniformity  m  packing 
shipping  and  grading  the  product.    A  striking  illustration 

associations  ^j  ^^-^^  j^  ^^^^^  ^y  ^^  q  Harold  Powell,  Man- 
ager of  the  California  Fruit  Growers  Exchange,  in  his  book, 
Co-operation  in  Agriculture.  The  loss  on  the  California 
orange  crop  from  decay  due  to  careless  handling  in  picking 
and  packing  was  from  $750,000  to  $1,500,000  annually. 
The  picking  and  packing  were  taken  charge  of  and  done  by 
the  associations,  and  the  loss  from  this  cause  was  practically 
all  prevented.  In  few  cases  of  farmers'  shipping  organiza- 
tions do  the  associations  themselves  do  the  picking  and 
packing,  but  in  each  case  the  work  is  carefully  supervised 
and  inspected  by  the  association's  experts  and  thus  a  fairly 
uniform  grade  and  quality  is  insured. 

Then,  of  course,  another  great  advantage  is  the  immense 
reduction  of  expense  of  supervision  of  marketing,  together 
with,  in  many  cases,  the  ability  of  the  organized  producers 
to  hire  more  expert  men  to  handle  this  important  end  of 
the  work.    The  telegraph  bills,  for  instance,  to  get  informa- 


CO-OPERATIVE   PRODUCTION  259 

tion  about  markets,  etc.,  run  into  many  thousands  of  dollars. 
This  and  other  like  expenses  being  spread  over  a  large  out- 
put become  trifling  to  each  grower.^  It  is,  of  course,  pos- 
sible to  systematize  the  selling  and  shipping  business  when 
enough  of  it  is  done  under  a  single  control. 

A  long  step  will  have  been  taken  toward  shortening  the 
road  between  producers  and  consumers  when  growers  get 
into  shape  through  organization  to  insure  to  consumers 
goods  of  uniform  quality  and  standard  grading.  Immense 
losses  have  been  sustained  by  both  farmers  and  consumers 
by  careless  and  dishonest  packing.  Much  attention  is  now 
being  paid  to  standardizing  packages  and  packing  so  that 
the  distant  buyer  may  know  just  what  quantity  and  quality 
he  is  getting.  In  the  case  of  many  products  it  is  not  now  pos- 
sible to  buy  without  seeing  the  articles  or  at  least  a  sample. 

Thus  are  producers  reaching  out  towards  consumers  with 
products  of  known  value.  It  is  now  time  for  consumers  to 
meet  producers  halfway  by  organizing  to  buy  Consumer 
collectively  direct  from  organized  producers.  Ihouid^  meet 
It  should  now  be  possible  for  products  of  many  producers'  so- 
kinds  to  pass  directly  from  the  ownership  and  way^^ 
control  of  original  producers  to  the  ownership  and  control 
of  ultimate  consumers,  thus  eliminating  all  the  lost  motion 
and  needless  expense  caused  by  the  present  middleman  sys- 
tem. When  the  channel  of  distribution  is  operated  at  the 
source  by  organized  producers  and  at  the  mouth  by  or- 
ganized consumers,  the  security  to  consumers  and  the  saving 
to  society  will  be  indeed  gratifying  to  all  who  wish  to  see  two 
blades  of  grass  grow  where  one  grew  before.  This  is  the  key 
to  the  greatest  problem  of  both  the  producer  and  the  con- 
sumer. IMr.  Hoover  is  quoted  in  this  morning's  -  papers  as 
saying  that  the  fixing  of  the  price  of  wheat  by  the  govern- 
ment saves  $3  per  barrel  of  flour  to  the  consumer  and  gives 

1  The  Walnut  Growers'  Association  have  reduced  the  total  cost  of 
marketing  from  36/100  to  40/100  cents  per  pound,  whereas  it  formerly 
cost  7  cents  a  pound. — Paul  Findlay  in  Printers'  Ink. 

-  New  York  Times.  Statement  made  at  the  war  convention,  U.  S. 
Board  of  Trade,  Atlantic  City,  September  19,  191 7. 


26o         CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

$3  additional  to  the  farmer.  Whatever  speculation  and  ex- 
tortion and  waste  may  have  been  eliminated  between  grower 
and  consumer  by  the  war  food  control,  it  is  not  better  than 
producers'  and  consumers'  co-operation  could  do  with  alj 
products,  to  the  national  saving  of  biUions  of  dollars  a  year. 
Producers'  co-operative  organizations  have  their  own 
troubles  with  members  and  those  who  ought  to  be  members, 
Troubles  of  due  to  lack  of  consciousness  of  solidarity,  of 
detSs^^  cor-°'  organization  and  of  integrity,  broad-mindedness 
respond  to  and  business  insight  on  the  part  of  farmers. 
£mlr?  sS-"  When  an  association  of  far-sighted  management 
cieties  sets  out  to  market  the  orange  or  walnut  crop  of 

California,  the  apple  crop  of  Oregon,  or  the  grape  crop  of 
the  Chautauqua  section,  the  policy  will  be  based  upon  the 
idea  that  the  goods  must  be  sold  v/herever  buyers  can  be 
found  or  created — this  to  avoid  glutting  the  best  markets. 
To  bring  this  about  will  involve  incurring  extra  selling 
charges  like  advertising,  sending  men  to  remote  points, 
equalizing  freight  charges  and  perhaps  making  lower  in- 
troductional  charges,  all  for  the  benefit  of  all  growers.  It 
is  often  possible  for  private  buyers  without  any  of  these 
expenses,  but  with  the  advantage  of  the  conditions  brought 
about  thereby,  to  give  the  grower  a  slightly  higher  price, 
at  least  temporarily,  and  this  wins  away  or  keeps  out  of  the 
organization  the  short-sighted  and  selfish  who  are  willing 
to  profit  by  the  work  of  the  association  without  sharing  its 
expense.  There  are  also  growers  who  are  not  willing  to 
conform  to  the  quality  standards  set  by  the  Association,^ 
and  for  that  reason  refuse  to  co-operate.  These  forces  of 
disintegration  ruin  many  an  association.  So  the  work  of 
education  is  cut  out  for  the  producing  co-operators  also. 
But  great  progress  is  being  made  and  through  costly  expe- 

1  "The  worst  enemy  of  the  farmers  of  America  is  the  crooked  farmer 
who  puts  out  his  product  under  false  pretenses  and  thinks  that  his 
short-sighted  tricks  are  putting  him  ahead  in  the  game.  He  fouls  the 
whole  nest  for  himself  and  every  man  in  his  particular  line  of  produc- 
tions'—Prominent fruit  grower  quoted  by  Forrest  Crissey  in  Saturday 
Evening  Post. 


CO-OPERATIVE   PRODUCTION  261 

rience  and  propaganda  a  favorable  consensus  of  opinion  is 
growing  among  producers,  and  it  is  a  healthy  indication 
that  motives  other  than  narrowly  selfish  ones  are  being 
brought  to  bear  among  some  of  the  national  societies.  It 
is  gratifying  that  the  federal  government  is  doing  much  to 
help  and  encourage  producers  to  co-operate  in  growing  and 
marketing. 

A  sharp  distinction  needs  to  be  made  between  producer 
co-operation,  in  which  benefits  and  dividends  are  computed 
upon  what  is  produced,  and  consumer  co-opera-  Producers' 
tion  in  which  benefits  and  dividends  are  paid  l°^l^l^  ^-^^ 
on  what  is  consumed  by  each  member.  Not  all  consumers' 
co-operative  production  is  carried  on  by  co-  purpose  "Vf  ^ 
operation  for  the  benefit  of  producers.  If  a  co-  production 
operative  store  conducts  a  bakery,  all  the  savings  from  run- 
ning the  bakery  go  to  consumers  as  cofisumers.  Workers 
in  the  bake  shop  are  employees  of  the  consumer  society  and 
receive  fixed  wages.  Thus  a  co-operating  consumer,  buying 
twenty  dollars  worth  of  bake  stuff,  will  get  a  dividend  as 
large  as  the  savings,  i.  c. — 10  per  cent  or  $2.  This  dividend  in 
consumer  co-operation  does  not  go  to  producers  as  in  the  case 
of  producer  co-operation.  Thus  the  co-operative  production 
of  a  hundred  millions  of  dollars  worth  of  goods,  and  more, 
per  year  in  Great  Britain  is  consumer  co-operation,  and  all 
the  savings  which  in  producer  co-operation  would  go  to 
producers  go  to  consumers,  each  in  proportion  to  the  amount 
of  his  purchases.  There  are  radical  disciples  of  co-operation 
of,  by  and  for  consumers,  who  arc  opposed  to  producer  co- 
operation on  the  ground  that  such  producers  acting  to- 
gether seek  to  get  the  highest  possible  price,  that  they  are 
engaged  in  exploiting  the  consumer.  They  urge  that  con- 
sumers should  initiate  production,  producing  not  for  profit 
but  for  consumption  at  cost,  and  should  gradually  take  over 
all  production,  conducting  it  in  the  interest  of  consumers. 
This  the  British  Wholesale  have  done  in  large  measure,  so 
that  the  butter  they  make  in  Ireland,  the  tea  grown  in 
Ceylon,  or  the  wheat  produced  in  Australia,  reaches  the 
remotest  consumer  at  a  price  wliich  includes  no  profit  to 


262         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

anyone  but  interest  upon  the  land  value  and  fair  wages  to 
all  who  helped  to  grow,  make  and  transport  the  product. 

It  is  true  that  the  orange  growers  of  California  co-operate 
to  get  from  the  consumer  the  highest  price  possible,  but  this 
will  not  be  proven  to  be  anti-social  until  the  consumers  dem- 
onstrate that  they  could  raise  the  fruit  for  less  on  the  av- 
erage than  they  would  have  to  pay  the  present  growers. 
The  consumer's  dollar  paid  in  191 5  for  oranges  went  as 
follows:  the  retailer  got  24.9  cents,  freight  17.6  cents,  the 
jobber  8.1  cents,  harvesting  i.i  cents,  advertising,  publicity 
and  all  other  expenses  of  exploitation  1.2  cents,  and  growers 
40.3  cents.  ^ 

At  the  present  time  there  seems  to  me  to  be  much  more 
hope  of  cutting  in  half  the  33  cents  going  to  jobber  and  re- 
tailer in  the  interest  of  consumers  than  in  saving  any  of  the 
40  cents  which  the  grower  gets.  Especially  is  this  true  when 
we  recall  that  orange  acreage  will  increase  just  as  long  as 
growers  can  make  a  living  producing  the  fruit  under  present 
efficient  marketing  methods.  What  consumers  need  to  do 
is  to  assume  control  of  the  final  steps  of  distribu- 
wS™rweil  tion  and  manage  them  in  their  own  interest  as 
at  present  to  efficiently  as   these  producers  are  conducting 

co-operate  ,       .    .  .,  -    , .       .,       .  -^  r  ^ 

with  the  pro-  the  mitial  stages  of  distribution.  Moreover,  to 
Sel'in  °"  worry  about  what  will  come  to  pass  when  pro- 
fieids  where  ducers  and  consumers  finally  join  issues  at  the 
such  exist  halfway  point  between  source  and  destination 
of  products  is  to  cross  a  bridge  which  is  a  very  long  way  off. 
Meantime  consumers  can  afford  to  bid  Godspeed  to  co- 
operating producers,  especially  as  when  consumers  have  the 
wit  to  act  collectively  they  can  always  produce  whenever 
and  wherever  their  interests  can  be  furthered  by  so  doing. 

Sources  of  Further  Information  on  Co-operation  of 
Producers 

Co-operation  in  Agriculture:  G.  Harold  Powell,  Macmillian. 
Co-operation  Among  Farmers:  John  Lee  Coulter,  Sturgis  and 
Walton. 

'  Printers'  Ink. 


CO-OPERATIVE  PRODUCTION  263 

Marketing  of  Farm  Prodmis:  L.  D.  H.  Weld,  Ph.  D.,  Mac- 
millan. 

Co-operation  in  the  United  States:  S.  W.  Perky,  Ph.  D.,  Co- 
operative League  of  America,  70  Fifth  Ave.,  New  York  (pam- 
phlet— 10  cents). 

Many  pamphlets  are  issued  by  the  U.  S.  Department  of  Agri- 
culture and  most  of  the  state  departments  of  Agriculture.  Most 
of  them  are  sent  free  on  application. 


CHAPTER  XXIII 

THE  PROSPECT  FOR  CO-OPERATION  OF  CON- 
SUMERS IN  AMERICA 

"The  power  of  wealth  and  of  privilege  can  be  successfully  met  by 
the  people  only  by  utilizing  to  the  full  extent  the  power  of  numbers; 
utilizing  that  power  not  only  politically  but  industrially.  .  .  .  Eman- 
cipation can  come  only  through  the  utilization  by  the  people  not  only 
of  their  power  of  production  but  of  their  own  purchasing  power." — 
Louis  D.  Brandeis,  Justice  U.  S.  Supreme  Court. 

In  the  preceding  pages  I  have  endeavored  to  show  how 
the  power  of  the  dollar  to  command  the  satisfactions  of 
life  can  be  greatly  enlarged  and  the  business  of  distribution 
harmonized,  moralized  and  socialized  through  co-operative 
buying.  It  remains  to  consider  in  this  chapter  the  outlook 
for  Rochdale  co-operation  in  this  country,  and  in  the  final 
chapter  to  point  out  what  seem  to  me  the  tilings  to  be  done 
to  establish  this  beneficent  order  in  America. 

Probably  few  careful  students  of  the  problem  will  deny 
the  advantages  which  I  have  claimed  for  co-operation  of 
Approval  of  consumers.  Many  economists  see  and  admit 
theo?r^very  ^^^  ^^lly  and  waste  of  the  present  distributive 
general  system.     Many  deplore  the  burden  to  the  poor 

caused  by  the  bungling  business  incident  to  unregulated 
competition  for  profit.  As  a  matter  of  fact,  the  pres- 
ent profit  system  is  as  inconsistent  with  real  democracy  as 
farming  out  the  taxes  to  the  speculative  tax  gatherer,  so 
common  in  the  good  old  days.  Mr.  Justice  Brandeis,  has 
this  to  say  about  it, — 

"The  position  of  Money  Kings  is  much  like  that  of  the 
monarch  in  the  kingdoms  of  old.  We  have  no  place  in  the 
American  democracy  for  the  Money  King,  not  even  for 
the  merchant  prince.  Industrial  democracy  must  supple- 
ment political  democracy;  industrial  liberty,  political  lib- 


CO-OPERATION  IN  AMERICA  265 

erty.  Political  independence  and  industrial  dependence 
cannot  long  exist  in  the  same  individual.  We  are  con- 
fronted in  the  twentieth  century,  as  we  were  in  the  nine- 
teenth century,  with  an  irreconcilable  conflict.  Our  democ- 
racy could  not  endure  half  free  and  half  slave. 

"The  essence  of  the  trust  is  a  combination  of  the  cap- 
italist, by  the  capitaUst,  for  the  capitalist. 
-  "The  essence  of  the  co-operative  society  is  association  of 
the  people,  by  the  people  and  for  the  people." 

Approval  of  the  theory  of  co-operative  organization  of 
consumers  for  bu}'ing  collectively  is  very  general.  But  dis- 
trust of  co-operation  as  a  practical  remedy  for  Distrust  of 
the  shortcomings  of  present  distribution  is  about  ^tiity'^^of '*co- 
as  general  as  admiration  of  the  theory.  Has  not  operation 
the  co-operative  store  been  tried  in  hundreds  of  places  in 
all  parts  of  the  country  and  failed?  Even  before  the  Roch- 
dale pioneers  made  their  memorable  start  in  1S44,  co- 
operative stores  were  tried  in  this  country. 

Before  the  middle  of  the  last  century  the  Workingmen's 
Protective  Union  had  quite  a  number  of  stores  in  New 
England.    Latter  the  International  Industrial  Assembly  of 
America  and  the  National  Labor  Union  promoted  stores  and 
stood  for  the  principle  as  did  also  the  Patrons  of  Husbandry 
and  the  Knights  of  Labor  in  the  latter  part  of  the  century. 
And  yet  co-operative  buving  has  never  gone  far  enough  in 
this  country  to  establish  and  maintain  an  efh-  present  ex- 
cient  wholesale  house.  ^     There  are  somewhere  tent   of   con- 
between   500  and   1,000   isolated   co-operative  operation  in 
stores  in  the  United  States  at  this  tmie.    But  ^'^  country 
there  is  no  store  to  which  the  friends  of  co-operation  can 
point  and  claim  that  it  has  under  normal  average  conditions 
adequately  demonstrated  the  value  of  co-operative  buying.- 

1  The  Rochdale  \VholesaIe  in  San  Francisco  was  a  good  start  but 
had  too  small  a  business  to  demonstrate  the  idea. 

-  For  a  recent  account  of  co-operation  in  this  countr\'  see  Co- 
operation in  the  United  States,  by  Chevcs  West  Perky,  Co-operative 
League  of  America,  2  West  13th  St.,  New  York  City.  (Pamphlet, 
price  30c.) 


266         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

What,  then,  is  the  outlook  for  consumers'  co-operation 
in  this  country?  Perhaps  prophecy  on  this  subject  may  be 
The  outlook  considered  profitless,  and  any  individual  opin- 
ion may  be  so  far  colored  by  personal  experience  and  per- 
sonal temperament  as  to  be  without  value. 

The  Montclair  (N.  J.)  Co-operative  Society  with  paid-in 
capital  of  $10,400,  432  members  largely  among  the  well-to- 
do,  built  up  a  trade  in  five  years  of  over  $100,000.  Owing  to 
mistakes  of  management  early  in  its  history  the  society 
found  itself  without  sufficient  capital  to  meet  war  condi- 
tions. ^ 

Co-operative  buying  will  succeed  when  people  realize  the 
overwhelming  advantages  of  co-operative  distribution  over 
Conditions  of  profit  distribution  and  when  they  comply  with 
success  ^i^g  plain  conditions  of  success.    What  are  the 

requirements  for  success?  They  are  two.  To  run  a  success- 
ful co-operative  store  requires,  first,  real  co-operation,  and, 
second,  the  right  kind  of  store.  There  must  be  an  adequate 
group  of  real  co-operators  and  they  must  run  a  store  on 
sound  co-operative  store  principles.  That's  all.  The  mem- 
bers must  understand  what  co-operation  means  and  must 
take  the  matter  seriously.  The  store  policy  must  be  adapted 
to  the  co-operative  ideal.  The  usual  sales-pushing,  bargain- 
offering  store  is  as  weak  and  unfitted  to  co-operation  as  an 
ordinary  horse  vehicle  is  unfitted  to  an  automobile  engine. 
So  it  takes  a  real  co-operative  group  and  a  real  co-operative 
store  to  deserve  success.  Did  you  ever  know  a  store  which 
had  both  of  these?  I  never  did.  I  have  looked  into  many 
stores  which  failed,  and  I  have  yet  to  discover  one  which 
did  not  invite  failure.  The  failure  of  hundreds  of  "co- 
operative" stores  simply  means  nothing  so  far  as  the  merits 
of  co-operative  buying  are  concerned.  The  principles  of 
co-operative  buying  are  sound.  They  prove  out  so  far  as 
they  are  tried. 

The  co-operative  store  in  America,  almost  without  ex- 
ception, has  been  started  under  a  false  idea.    This  idea  is 

^  The  writer  has  taken  over  this  store  and  will  endeavor  to  work  out 
some  economies  in  food  handling  which  may  later  help  co-operators. 


CO-OPERATION   IN  AMERICA  267 

that  the  dealer  receives  a  large  arbitrary  profit  and  this 
profit  could  be  cut  out  simply  by  starting  a  co-operative 
store.  As  we  have  seen,  the  dealer  does  not  get  a  large  ar- 
bitrary profit.  So  when  the  store  is  started  and  fails  to 
give  its  members  this  large  saving  at  once,  people  are  dis- 
appointed and  quit.  The  fact  is  that  the  savings  from  co- 
operation must  come  mostly  by  doing  the  distributive  work 
at  less  expense  than  the  profit  dealer  pays  and  this  takes 
time,  ability  and  patient  working  out. 

But  it  can  and  will  be  done.    Consumers  have  before  them 
the  problem  of  developing  more  direct  ways  of  distribution 
and  seeing  that  these  ways  are  followed.    They  Large  co- 
need  only  do  for  themselves  what  the  manufac-  operative  en- 
turers  of  New  England  have  done  for  themselv'es,  force  in 
and  the  farmers  of  the  west  for  themselves  in  America 
the  matter  of  fire  insurance.    In  1870  it  cost  the  mill  owners 
31.8  cents  per  year  for  each  $100  in  insurance.    The  Mutual 
(co-operative)  insurance  plan  was  adopted  and  in  iqoo  the 
cost  had  been  reduced  from  this  31.8  to  6.5  cents  per  Sioo. 
To  be  sure  this  reduction  was  largely  due  to  the  introduction 
of  preventive  appliances,  but  the  co-operative  plan  itself 
saved  very  much  and  put  the  motive  for  saving  in  the  right 
place.    In  1910  there  was  $2,220,000,000  of  such  insurance 
in  force. 

Perhaps  the  most  striking  instance  of  successful  con- 
sumers' co-operation  in  this  country  is  to  be  found  in 
farmers'  fire  insurance.  "There  are  at  present  nearly 
2,000  farmers'  mutual  fire  insurance  companies  in  the  United 
States.  These  companies  carry  a  total  amount  of  insurance 
exceeding  $5,250,000,000.  The  property  in  which  the  in- 
surance is  written  is  valued  at  more  than  $6,700,000,000, 
which  is  more  than  two-fifths  of  the  value  of  all  the  insurable 
farm  property  in  the  forty-eight  states."  ^  Why  this 
enormous  growth  of  co-operative  self-supply  of  insurance? 
It  is  because  the  regular  fire  insurance  companies  incur 
enormous  expenses  not  to  perform  useful  serx-ice  for  the 
insured  but,  like  profits,  to  benefit  the  companies.  Says 
^  Year  Book,  U.  S.  Department  of  Agriculture,  1916,  page  421. 


268         CO-OPERATION  THE   HOPE   OF  THE   CONSUMER 

the  authority  above  quoted:  "It  may  be  safely  said  that  in 
a  number  of  the  states  where  farmers'  mutual  insurance  is 
most  highly  developed,  the  average  cost  of  insurance  for 
all  these  companies  in  the  state  has  fallen  well  below  one^ 
half  of  the  rates  quoted  by  commercial  companies  or  so- 
called  bureau  rates.  Some  idea,  therefore,  of  the  total 
annual  saving  to  the  farmers  of  the  country  through  co- 
operation in  fire  insurance  may  be  readily  formed.  The 
saving  of  the  farmers'  mutual  insurance  cost  may  be  cred- 
ited mainly  to  two  sources.  First,  the  expenses  of  operation 
necessarily  incurred  by  large  commercial  companies  for 
commissions,  salaries,  dividends,  taxes,  rent,  rating  charges, 
legal  assistance,  etc.,  have  been  either  greatly  reduced  or 
entirely  eliminated.  Second,  the  losses  experienced  have 
been  fewer  by  reason  of  the  practical  removal  of  the  moral 
hazard."  ^ 

The  problem  which  has  been  met  and  solved  by  these 
thousands  of  textile  mills  and  millions  of  farmers,  is  very 
Americans  similar  to  the  vastly  more  important  and  press- 
should  be       ing  one  which  confronts  consumers.     Here  is 

able  to  act  .  •   i    c         -•  i,*  u 

together  as  purveying,  a  necessary  social  function  which 
consumers  jg  being  performed  at  an  expense  to  the  con- 
sumer, direct  and  indirect,  of  probably  double  what  the 
work  might  be  better  done  for  by  consumers  acting  collect- 
ively. 

Moreover,  a  way  has  been  pointed  out  in  England,  and 
there  tested  and  proved,  by  which  the  service  can  be  sat- 
isfactorily and  economically  performed.  The  co-operative 
plan  is  just  as  truly  demonstrated  as  was  the  flying  machine 
after  a  successful  flight  had  been  made.  As  Dr.  John 
Graham  Brooks  says,  "If  the — (naming  a  promotion  or- 
ganization) has  one  store  which  has  followed  the  whole 
program  laid  down  by  it,  and  that  store  is  successful,  it 
has  proven  its  case.  It  has  given  the  most  invincible  proof 
that  in  its  own  field  business  may  be  democratized."  The 
soundness  of  the  co-operative  idea  has  been  demonstrated 
by  a  steady  and  stable  growth  in  Great  Britain  for  nearly 
1  Year  Book,  U.  S.  Department  of  Agriculture,  1916,  page  480. 


CO-OPERATION  IN  AMERICA  269 

three-quarters  of  a  century  and  has  been  proved  out  in 
many  isolated  cases  in  America.  There  are  several  stores  in 
New  England  which  are  twenty  to  forty  years  old,  which 
prove  the  possibility  of  maintaining  a  store  owned  by  con- 
sumers. The  Tamarack  ^  Co-operative  Association  of 
Calumet,  Michigan,  has,  in  the  face  of  sharp  competition, 
paid  its  stockholders  eight  per  cent  each  year  for  the  past 
twenty-five  years,  and  for  the  past  fifteen  years  has  returned 
twelve  per  cent  or  more  to  its  members  as  dividends  on 
purchases,  having  conducted  its  business  at  the  low  cost 
of  twelve  per  cent  including  delivery.  At  Olathe,  Kansas, 
the  Johnson  County  Co-operative  Association  has  been 
doing  a  successful  business  since  1876,  the  annual  trade 
amounting  to  about  $250,000  with  fair  dividends  to  mem- 
bers each  quarter. 

I  have  said  that  in  many  cases  the  validity  of  the  co- 
operative principle  has  been  proven  in  this  country  so  far 
as  the  enterprise  ivcnt.  I  mean  that  the  plan  has  Co-operative 
been  proved  out  piecemeal  but  so  far  as  I  can  ^Joved"^oSr° 
learn  never  has  been  as  comprehensively  tested  piecemeal 
as  would  be  necessary  to  show  the  value  of  complete  co- 
operation of  an  adequate  group  working  with  complete 
and  truly  co-operative  distributive  machinery  and  methods. 
But  the  value  of  the  plan  has  been  demonstrated.  And 
American  people  have  demonstrated  through  building  and 
loan  undertakings,  co-operative  shipping,  co-operative 
creameries,  co-operative  insurance,  and  in  other  ways,  that 
they  can  work  together  for  common  ends  as  they  would  be 
required  to  do  to  make  co-operative  buying  successful. 
It  is  only  necessary  that  people  get  the  same  intelligent 
grasp  of  the  co-operative  buying  idea. 

Another  reason  why  I  believe  co-operation  is  bound  to 
come  is  that  the  reasons  given  by  the  disbe-  Reasons  why 
lievers  why  co-operation  cannot  succeed  are.  co-operation 
in    my    opinion,    wholly    inadequate    and    ill  ceed°whon'y 
founded.     What  are   these  reasons,   generally  "la^^equate 
given,  why  co-operation  in  America  cannot  succeed? 

1  For  an  account  of  the  promising  work,  in  Canada,  see  Appendix  L 


270         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

Americans,  it  is  said,  are  too  well  off,  whereas  co-operation 
succeeds  only  where  dire  necessity  forces  it.  To  this  it 
seems  sufficient  to  reply  that  in  Europe  co-operation  is  most 
successful  not  with  the  very  poor  but  with  the  middle 
class.  What  we  need  is  not  the  poorest,  but  people  com- 
petent to  count  the  cost  of  what  they  buy  and  to  know  and 
appreciate  savings.  This  group  is,  happily,  growing  day 
by  day. 

Another  assertion  is  that  we  in  this  country  are  such 
hopeless  individualists  that  we  cannot  learn  to  act  together. 
If  this  be  so,  there  is  a  sorry  outlook  for  democracy.  The 
present  war  would  seem  to  indicate  that  we  can  and  do  act 
together  when  the  object  is  sufficient,  and  that  we  believe 
democracy  is  worth  fighting  for. 

The  argument  is  often  clinched  with  the  assertion  that 
only  private  profit  is  a  sufficient  incentive  to  develop  the 
initiative  needed  in  an  important  and  intricate  business 
which  must  meet  competition  of  dealers  spurred  on  by 
purely  pecuniary  motives.  This  may  be  to  some  extent  a 
matter  of  opinion,  but  as  I  look  at  it,  the  very  best  work 
done  in  the  service  of  society  is  motived  not  by  money  nor 
purely  selfish  incentives. 

Co-operation  will  come  when  enough  people  want  it 
and  want  it  enough.  That  day  will  be  hastened  by  the  dis- 
covery that  the  present  burdens  to  the  consumer  incident 
to  distribution  are  inherent  in  the  present  merchandizing 
system,  and  that  they  can  be  cured  by  thorough  co-opera- 
tion. 

Whether  the  nucleus  of  the  movement  which  is  to  plant 
How  will  co-operation  is  now  in  existence,  no  one  can  tell. 
American  con-  The  miners'  societies  of  Illinois  may  send  down 
operation  "be  finn  enough  roots.  Or  the  persistent  efforts 
developed?  q^  the  Pacific  coast  with  all  their  ups  and  downs 
may  finally  get  onto  a  permanent  footing. 

The  Finns,  whose  co-operative  operations  are  various  and 
include  the  ownership  of  property  worth  millions,  may  set 
us  the  right  example.  Or  some  plan  like  the  chain  stores  of 
N.  O.  Nelson  of  New  Orleans  may  show  such  economies  as 


CO-OPERATION   IN  AMERICA  27 1 

to  take  prominent  place.  ^  Again,  the  buying  club  move- 
ment may  discover  a  plan  which  will  show  large  economies, 
reduce  the  trouble  and  annoyance  to  a  minimum,  and  so 
gradually  develop  a  large  aggregate  turnover  and  hold  a 
permanent  place.  How  co-operation  will  come  no  one  can 
tell,  but  come  it  will,  and  in  a  form  broadly  adapted  to  the 
great  and  unique  American  setting. 

'  See  Appendices  for  reports  of  co-operative  status  and  outlook  in 
different  parts  of  North  America. 


CHAPTER  XXIV 

FOR  A  STRONG  CONSUMERS'  MOVEMENT  IN 
AMERICA 

What  can  be  done  about  it? 

We  have  seen  that  immense  burdens  are  imposed  upon 
consumers  by  the  competition-for-profit  system  of  mer- 
cantile distribution.  Under  present  day  aggressive  ad- 
vertising and  salesmanship  we  are  led  to  purchase  unwise 
and  often  extravagant,  unwanted  things,  while  we  are 
afforded  inadequate  facihties  for  wise  choice.  Consumers 
pay  an  annual  bill  of  hundreds  of  millions  of  dollars  for  un- 
wholesome advertising  and  other  forms  of  persuasive  sales- 
manship. 

It  is  also  made  clear  that  the  immense  annual  loss  from 
adulteration,  short  measure  and  other  forms  of  deception 
is  due  wholly  to  competition  for  profit. 

The  third  source  of  loss  to  the  consumer  lies  in  the  fact 
that  the  system  causes  dealers  to  incur  in  distribution  proc- 
esses— and  pass  on  to  the  consumer — various  needless  ex- 
penses beside  their  net  profits.  Private  profit  deahng  is 
inherently  too  expensive. 

Various  bad  economic,  social  and  ethical  influences  of  the 
system  have  also  been  pointed  out. 

The  almost  universal  belief  of  those  who  have  given 
special  attention  to  the  matter  is  that  a  large  portion  of  the 
present  cost  of  distribution  is  avoidable.  That  immense 
savings  could  be  made  by  the  adoption  of  efficient  methods 
for  the  present  costly  ones  is  evident  also  from  a  comparison 
of  the  present  cost  of  improved  distribution  of  certain  im- 
portant products  with  the  cost  before  reformed  systems 
were  devised.  Also  by  comparing  the  cost  in  occasional 
efficient  distributive  agencies  with  those  of  the  average 
chaotic  practice. 


FOR  A   STRONG  MOVEMENT  IN  AMERICA  273 

It  seems  probable  that  billions  of  dollars  could  annually 
be  saved  in  this  country,  hundreds  of  thousands  of  men  set 
free  to  engage  in  production  and  thousands  of  families 
brought  above  the  Une  of  want  by  a  thoroughgoing  revolu- 
tion in  distributive  processes. 

I  have  pointed  out  that  the  machinery  of  distribution 
is  in  the  hands  of  interests  having  no  incentive  to  reduce 
the  cost  of  distribution,  who  constantly  press  down  the  price 
paid  producers  and  raise  the  price  charged  consumers,  thus 
increasing  the  total  spread  or  cost  of  distribution. 

The  remedy  is  to  be  found  in  the  assumption  of  distribu- 
tion by  the  only  class  constantly  interested  in  reducing  its 
cost, — namely,  the  consumer-public.  This  transfer  of  owner- 
ship of  the  distributive  machinery  from  the  middleman  to  the 
consumer  would  automatically  remove  all  the  evils  of  over- 
stimulated  selling,  deception  and  lost  motion,  so  locate  the 
propelling  motive  as  to  make  for  social  welfare,  and  enor- 
mously reduce  the  cost  of  transferring  goods  from  source  to 
destination. 

This  collective  operation  of  the  distributive  machinery 
has  been  successfully  carried  on  in  Great  Britain  for  three- 
quarters  of  a  century.  Its  practicability  has  been  shown  be- 
yond any  doubt  and  its  advantages  largely  demonstrated. 

What  must  be  done  to  bring  wuthin  the  reach  of  Amer- 
icans the  immense  advantages  to  be  derived  from  co- 
operative buying?  To  answer  this  question  -v^rhat  must  be 
we  must  ask  at  what  points  the  consumer  may  done  to  plant 

^    ^  TT  -^    •  1.       •  A.  co-operation 

expect  to  save.    Here  it  is  easy  to  jump  to  a  in    American 
wrong  answer.     It  is  often  assumed  that  the  ^°^ 
cost  of  the  consumer's  goods  is  to  be  reduced  by  cutting 
out  the  net  profit  of  the  retailer.    This  is  a  great  mistake 
as  hundreds  of  groups  of  consumers  starting  with  high  hopes 
have  discovered  to  their  sorrow  after  they  have  put  their 
good  money  into  co-operation.     Take  retail  food  dealers 
the  country  over  and  they  probably  do  not  make  Savings 
so  much  as  two  per  cent  of  net  profit  on  their  ™e^i^r's^'^°" 
sales,  after  allowing  themselves  such  salary  as  a  profits 
co-operative  store  would  have  to  pay  a  manager.    Perhaps 


274         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

of  the  total  fifty  per  cent  or  so  which  the  consumer  is  charged 
for  bringing  his  food  to  his  kitchen,  not  over  five  or  six  per 
cent  of  the  retail  price  goes  in  net  profits  to  commission  men, 
wholesalers,  retailers  and  all  who  handle  the  goods  as  dealers. 
Now  the  great  saving  to  the  consumer  is  to  be  looked  for 
in  avoiding  the  waste  due  to  inefficient  distribution.  The 
waste  which  should  be  avoidable  is  probably  two  or  four 
times  as  much  as  the  clear  profit  to  dealers.  The  great  gain 
in  co-operative  buying  will  come,  then,  not  mainly  from 
saving  the  dealer's  net  profits,  but  in  so  locating  the  con- 
trol of  distribution  as  to  bring  to  bear  the  consumer's  in- 
centive to  discover  and  cut  down  other  cost. 

Steps  Toward  Consumer  Societies 

Steps  toward  the  establishment  of  consumers'  co-opera- 
tion would  seem  to  include  the  following: 
_,     ,    .  „  I.  Development  and  mobilization  of  the  co- 

Developmg  .  '.  .      .       .  ,  ,  i         .    j 

co-operative     operative  spirit  m  favorable  groups  so  located 
^^^"*  and  situated  that  definite  pecuniary  advantages 

can  be  shown  by  operating  through  an  agency  adapted  to 
local  conditions. 

This  might  be  a  buying  club  or  a  store.  Starting  a  store 
should  be  avoided  where  the  net  profit  of  present  stores  is 
so  small  that  from  a  like  spread  the  inexperience  and  in- 
efficiency of  the  new  co-operative  group  would  be  sure  to 
show  a  loss.  A  modest  buying  club,  composed  of  friends 
who  are  willing  to  do  their  own  work,  is  very  often  the  best 
instrument  of  saving  as  it  is  the  best  school  and  laboratory 
for  the  study  and  development  of  co-operative  principles. 

No  store  should  be  started  under  conditions  such  that  the 
enterprise  is  not  approved  after  careful  consideration  by 
good  judges  from  a  business  standpoint. 
Developing  ^^  Invention  and  development  of  the  most 

new    distrib-  economical  and  efficient  kinds  of  distributive 
"*'^^«^^'^""  agencies  or  stores. 

Of  the  present  state  of  the  art  of  merchandizing  Dr.  Paul 
H.  Nystrom  in  his  Economics  of  Retailing  says:  "The  costs 
of  distribution  are  admittedly  too  high  at  present  for  the 


FOR  A   STRONG  MOVEMENT  IN  AMERICA  275 

service  rendered.  The  same  inventive  genius  that  has 
been  applied  to  the  production  of  goods  so  as  to  cut  down 
the  cost  per  unit  can  no  doubt  be  applied  in  a  similar  way 
to  cut  down  the  cost  of  distribution  per  unit.  What  is 
needed  is  the  application  to  distribution  of  science  and  re- 
search as  these  methods  are  now  applied  to  production." 
Consumers  have  the  direct  incentive  to  apply  "science  and 
research"  to  this  problem  through  collective  action  and 
thereby  to  bring  to  themselves  and  their  fellows  enormous 
advantages.  When  the  eiBcient  machinery  is  developed 
and  the  irresistible  force  of  the  real  co-operative  group  is 
applied  thereto  the  results  are  sure  to  be  gratifying. 

3.  Experimentation  to  discover  best  methods  of  doing 
different  parts  of  store  work. 

4.  A  way  must  be  found  to  enlist  and  train  store  workers. 
To  run  a  co-operative  store  successfully  the  store  manager 
and  assistants  must  be  co-operators  as  well  as  storekeepers. 

There  is  undoubtedly  sufficient  latent  co-operative  sen- 
timent in  this  country,  enough  co-operators  possessing  the 
vision  and  the  energy.  The  problem  is  how  to  get  over  the 
dead  center  of  first  difficulties,  into  the  position  to  make 
clear  demonstration  of  the  merits  of  the  Rochdale  plan. 
A  clearing  house  of  information  and  literature,  like  that 
being  developed  by  the  Co-operative  League  of  America  ^  is 
a  long  step  in  the  right  direction.  But  two  equally  impor- 
tant steps  remain:  the  application  of  "science  and  research" 
to  practical  storekecping,  and  then  the  co-ordination  of  co- 
operation and  approved  distributive  methods. 

A  Building  Plan  Proposed 

Many  Rochdale  disciples,  undismayed  by  the  unsuccess- 
ful attempts  to  plant  isolated  stores,  are  firmly  conxinced 
that  consumer  co-operation  ought  to  work  in  this  country 
and  that  it  will  work  and  bring  its  immense  advantages 
when  wisely  and  resolutely  applied. 

The  important  question  is  how  a  test  may  be  made,  under 
conditions  which  shall  adapt  the  principle  to  American 
*  No.  3  West  13th  Street,  New  York  City. 


276         CO-OPERATION  THE  HOPE   OF   THE   CONSUMER 

needs  and  avoid  the  mistakes  common  in  American  groups. 
The  attempt  is  here  made  to  draft  a  plan  which  would,  if 
successful,  be  of  the  utmost  value  as  affording  such  a  dem- 
onstration and  which,  it  is  believed,  gives  every  promise  of 
success  if  properly  carried  out. 

The  first  concern  is  to  avoid  the  mistakes  and  weaknesses 
of  the  single  isolated  store,  by  bringing  to  bear  the  financial 
Objects  to  strength,  purchasing  power,  economy  and  effi- 
be  sought  ciency  of  large-scale  operation.  This  must  be 
brought  about  without  depriving  the  local  group  of  that 
measure  of  home  rule,  incentive  to  saving  and  growth,  and 
responsibility  which  make  for  devoted  interest  on  the  part 
of  members.  In  short,  the  purpose  must  be  to  leave  with 
the  local  group  those  duties  and  privileges  which  it  can  best 
handle,  and  to  place  in  charge  of  a  general  organization 
those  things  which  can  best  be  done  by  a  larger  body. 

In  some  territory — favorable  to  the  starting  of  a  consider- 
able number  of  local  distributing  agencies,  buying  clubs, 
The  plan  local  warerooms,  and  stores  of  various  kinds, — 
organize  a  co-operative  company.  This  company  should 
have  power  and  sufficient  authorized  capital  to  own  and 
run  as  many  local  units  as  seemed  best.  The  company 
should  first  accumulate  sufficient  practical  knowledge  of 
store  economy  to  know  what  localities  and  groups  could 
make  a  retailing  unit  profitable  and  what  kind  of  an  agency, 
buying  club,  store  or  other  would  be  best  adapted  to  the 
local  needs. 

The  company  should  then  start  and  own  a  local  unit 
wherever  a  group  would  subscribe  for  sufficient  stock, 
Establish-  enough  members  pledge  to  buy  regularly  at  the 
ment  of  local  store  and  comply  with  other  conditions  imposed 
"'"^^  by  the  general  company.     Capital  subscribed 

locally  should  be  sufficient  to  finance  the  local  unit  and 
make  a  proper  contribution  toward  the  general  capital. 
These  local  units  (stores  or  buying  clubs)  would  be  oumed 
by  the  company,  their  purchases  and  general  supervision 
would  be  in  its  hands,  but  they  would  have  their  own  local 
committees  and  manage  their  own  local  affairs  subject  only 


FOR  A   STRONG  MOVEMENT  IN  AMERICA  277 

to  such  general  rules  and  supervision  as  would  conserve  the 
capital,  including  that  subscribed  by  the  local  members  and 
make  for  greater  success. 

But  here  is  the  keystone  of  the  arch  of  its  plan :  namely, 
each  local  unit  would  pool  separately  and  retain  g^i^g  ^f  g^ch 
the  purchase  dividends  on  its  sales,  and  limit  unit  pooled 

^      ,        ,  separately 

its  own  local  expenses. 

To  the  price  of  the  goods  supplied  the  local  store  would  be 
added  a  percentage  to  meet  the  expenses  of  the  general  com- 
pany. But  these  expenses  should,  and  could  be  kept  very 
small,  amounting  to  hardly  more  than  a  fair  brokerage  on 
purchases.  The  general  company  would  undoubtedly  thus 
furnish  the  local  units  with  their  goods  at  materially  less, 
this  brokerage  included,  than  they  could  be  bought  by  an 
isolated  group.  And  besides  its  buying,  the  general  com- 
pany would  furnish  system,  auditing,  publicity  helps,  and 
also' such  general  supervision  as  would  eliminate  nearly  all 
risk  of  failure. 

This  plan  would  insure  all  the  economies  of  the  chain 
store  without  its  faults.  The  local  store  would  be  relieved 
of  the  expense  of  buying  which  costs,  say,  from  Functions  of 
one  to  three  per  cent,  thus  permitting  its  man-  ^"^^^^  ^^°^^^^ 
ager,  freed  from  all  responsibility  of  buying,  to  give  strict 
and  constant  attention  to  store  details.  A  less  expensive 
local  manager  would  be  required. 

The  local  group  would  have  immediate  control  of  local 
store  management,  deciding  how  simple  and  cheap  or 
elaborate  and  expensive  its  service  to  consumers  should  be. 
Thus  a  local  group  might  be  a  bu>dng  club,  unpacking  and 
dividing  its  own  goods  and  having  practically  no  local  ex- 
penses, or  it  might  have  the  most  elaborate  equipment  and 
ser\ice  to  meet  the  needs  of  expensive  trade.  With  the 
local  purveying  expenses  the  general  company  would  have 
no  concern,  so  long  as  they  were  covered  by  gross  profit  so  as 
not  to  cause  a  trade  deficit  to  be  met  by  the  general  com- 
pany. 

The  duties  of  the  central  management  would  be^  first 
and  foremost  to  provide  expert  advice  and  guidance  in  all 


278         CO-OPERATION  THE  HOPE   OF  THE   CONSUMER 

lines  essential  to  success.  It  would  see  that  a  wise  pro- 
gram of  education  in  co-operation  was  carried  out,  and 
Work  of  gen-  co-opcrative  principles  exemplified  by  the  local 
erai  company  groups.  It  would  disseminate  information  about 
efficiency  methods  and  see  that  the  whole  business  including 
that  of  the  local  stores  conformed  to  best  practice.  It  would 
enlist  and  train  store  managers  and  workers.  It  would  go 
into  buying  and  providing  goods  in  such  thoroughgoing 
manner  as  to  insure  a  constant  supply  of  what,  after  thor- 
ough investigation,  enlightened  consumers  would  choose  to 
buy — that  is,  the  really  best,  cost  considered,  not  necessarily 
what  consumers  buy  from  habit  or  as  the  result  of  adver- 
tising. To  do  this  would  require  more  than  a  passive  policy 
on  the  part  of  the  purchasing  department,  and  would  in- 
volve searching  food  sources  and  making  expert  tests  such 
as  the  single  store  cannot  afford.  The  seal  of  approval  of 
the  company  upon  a  commodity  would  come  to  be  better 
insurance  of  merit  than  national  advertising  and  at  a  frac- 
tion of  the  cost  to  the  consumer.  This  kind  of  buying  solely 
in  the  interest  of  the  consumer  would  be  of  decided  advan- 
tage to  the  membership. 

Information  for  consumers  regarding  the  goods  handled 
would  be  supplied  by  the  general  management.  This  would 
constitute  inexpensive  but  effective  advertising  for  local 
stores,  and  would  be  first  class  and  very  useful  buying  in- 
formation for  consumers. 

The  central  management  would  attend  to  audits  and  sur- 
veys of  local  stores,  requiring  of  them  the  necessary  facts 
and  figures  therefor  and  returning  reports  and  advice  based 
upon  showing.  This  supervision  would  be  a  decided  stim- 
ulus to  local  directors  and  managers. 

The  company  might  begin  with  a  single  local  store  or 
wareroom  to  serve  as  a  retail  as  well  as  wholesale  agency, 
A  safe  begin-  general  storehouse  and  offices.  This  should  be 
*"°8  so  small  and  inexpensive  as  to  incur  a  minimum 

of  overhead  unproductive  expense  at  the  start.  The  com- 
pany should  begin  with  some  funds  for  necessary  incidental 
expenses  in  connection  with  preliminary  investigations  and 


FOR  A   STRONG   MOVEMENT   IN   AMERICA 


279 


arrangements,  but  not  a  large  capital  to  tempt  to  unwise 
expenditure.  The  research  and  preliminary  work  should 
be  largely  done  by  volunteer  workers. 


LOCAL  UNIT 


GENERAL  OFFICE 


General  Ofl&ce  Does 
for  Itself: 

Local  Store  Does  for 
Itself: 

General  Office  Does  for 
Local  Store : 

Manages  office 

Hiring  wholesale  man- 
agers, buyers,  organ- 
izers,   accountants 
and  others 

Financing    of    larger 
organization 

Propaganda    for    the 
CO-  operative  cause 

Promotion    of    mem- 
bership 

Renting  store,  selecting 
fixtures,  etc. 

Hiring  manager 

Organizing  and  manag- 
ing local  service 

Reporting    to    general 
office 

Local  propaganda  and 
advertising 

Promotion  of  member- 
ship 

Promotion  and  organiza- 
tion 

Advice,  auditing,  supervi- 
sion 

Buying 

1.  Food  testing 

2.  Investigation  of  sources 

3.  Getting  prices 

4.  Financing 
Publicity,  printing,  etc. 
Training    store    managers 

and  other  workers 

Local  Store  Does  for  Gen- 
eral Office: 

Furnishes   laboratory    for 
developing  new  methods 
and  training  workers 

Partially    supports    it 
through  commissions  on 
buying 

Governs  it  through  repre- 
sentatives locally  elected 

Functions,  independent  and  reciprocal,  of  General  Office  and  Local  Units. 

A  fairly  complete  tentative  plan  should  be  worked  out 
showing  items  of  cost  and  investment  before  subscriptions 
are  asked  for.  These  plans  should  be  such  as  Plan  of  work 
to  merit  the  approval  of  competent  and  well  Jfp^^*  ieioT%- 
informed  merchandizers,  as  well  as  of  the  most  hand 
idealistic  believers  in  the  Rochdale  philosophy.  To  collect 
a  large  capital  without  first  working  out  the  construction 


28o         CO-OPERATION   THE   HOPE   OF   THE   CONSUMER 

plans  step  by  step  is  to  invite  almost  certain  failure.  It  is 
not  safe  to  lose  sight  of  the  fact  that  savings  to  consumers 
are  to  be  chiefly  made  by  simplifying  distribution  and  de- 
vising economies  of  operation,  and  only  secondarily  taking 
over  the  profits  of  dealers  in  excess  of  the  usual  expense  of 
handling  goods. 

Of  this  plan  the  freest  and  most  searching  criticism  is 
in\ated.  It  is  very  incomplete,  but  to  my  mind,  comes  the 
nearest  to  pointing  the  way  to  success  through  merchan- 
dizing efficiency  infused  with  co-operative  idealism,  of  any 
program  thus  far  proposed  in  this  country.  Without  being 
unwieldy  it  so  unites  local  stores  as  to  avoid  what  is  for  us 
the  looseness  of  the  federation  plan  by  which  the  English 
This  plan  stores  own  the  wholesale.  It  avoids  the  be- 
avoids  com-    numbing  influence  of  pooling  together  different 

mon  pitfaUs        ,  •  n        •*.      *•  ^u 

stores  in  very  unlike  situations,  as  was  the  case 
with  the  California  Rochdale  Company  and  is  still  with  the 
New  England  Company.  It  gives  the  local  store  the  ben- 
efit of  valuable  advice,  better  buying  than  is  otherwise  pos- 
sible, economy  of  operation  and  a  financial  strength  at  once 
conducive  to  respect  and  the  promotion  of  membership. 

Put  behind  this  plan  a  group  of  constructive-minded  co- 
operators  who  are  as  devoted  to  consumers'  co-operation  as 
the  wonderful  possibiHties  of  the  plan  justify,  some  of  them 
having  free  time  and  some  of  them  free  money,  and  it  may 
be  expected  to  go  far.  After  years  of  study  and  experience 
in  co-operation  and  merchandizing  I  am  persuaded  that 
somewhere  in  this  direction  lies  the  route  to  the  promised 
land  of  liberty  and  democracy  for  consumers. 

But  feeling  no  doubt  that  the  irreducible  minimum  which 
can  be  justly  claimed  for  Rochdale  co-operation  is  that  it 
furnishes  the  key  which,  properly  inserted,  will  unlock  the 
greatest  economic  problem  before  the  American  people,  I  am 
not  at  all  disposed  to  dogmatize  as  to  plans  and  programs. 

While  here  lies  pecuniary  relief,  easier  access  to  the  good 
things  of  life,  here  we  may  also  look  for  justice,  equity, 
fraternity  and  a  large  measure  of  social  well-being. 


FOR  A   STRONG  MOVEMENT  IN  AMERICA  28 1 

Surely  the  need  is  so  urgent,  and  the  incentives  to  achieve- 
ment so  great  and  the  promise  of  co-operation  so  real  that 
any  well-wisher  of  his  kind  who  thoroughly  grasps  the  prin- 
ciples can  hardly  withhold  his  hand  from  intelligent  effort. 

Much  in  this  book,  may  be  found  to  hit  wide  of  the  mark, 
but  the  subject  is  so  commanding  that  even  to  have  written 
error  where  such  it  prove  to  be,  is  not  without  value  if  it 
challenges  others  to  seek  the  truer  way.  Only  through  the 
devoted  and  intelligent  application  of  co-operative  prin- 
ciples to  the  right  sort  of  distributive  methods  will  the  con- 
sumer come  into  his  own. 


APPENDIX   I 

STATUS  AND  OUTLOOK  OF  CO-OPERATIVE  BUY- 
ING IN  DIFFERENT  SECTIONS  OF  NORTH 
AMERICA 

In  order  to  get  first  hand  information  regarding  the  present 
status  of  consumer  co-operation  in  various  parts  of  this  country 
and  Canada,  I  have  written  men  close  to  the  work  in  each  sec- 
tion and  am  privileged  to  give  the  following  reports  and  expres- 
sions of  opinion. 

I  trust  that  before  long  some  one  will  give  a  comprehensive 
survey  of  the  whole  subject  in  a  manner  much  fuller  and  more 
detailed  than  Mrs.  Perky  has  done  in  her  nevertheless  valuable 
pamphlet  published  by  the  Co-Operative  League. 

A.  HOW  IT  LOOKS  IN  CANADA, 

BY  George  Keen,  Honorary  Secretary  Co-Operative 
Union  of  Canada 

The  Co-operative  Union  of  Canada  was  organized  on  the  6th 
day  of  March,  1909,  to  perform  functions  similar  to  those  of  the 
British  Co-operative  Union.  It  is  a  federation  of  bona  fide  co- 
operative societies,  all  of  which,  at  present,  are  on  the  Roch- 
dale Plan.  At  present  the  societies  in  afnliation  are  the  following: 
The  Guelph  Co-operativ'e  Association,  Ltd.,  Guelph,  Ont. 
The  Peterborough  Co-Operative  Society,  Ltd.,  Peterborough, 

Ont. 
The  Gait  Co-operative  Society,  Ltd.  Glat,  Ont. 
The  Industrial  Co-operative  Society  of  Hamilton,  Ltd.,  Hamil- 
ton, Ont. 
The  Industrial  Co-operative  Society,  Ltd.,  Valleyfield,  Que. 
The    British    Canadian    Co-operative   Society,    Ltd.,    Sydney 
Mines,  N.  S. 


284  APPENDIX   I 

The  Glace  Bay  Co-operative  Society,  Ltd.,  Glace  Bay,  N.  S. 
The  Merritt  &  District  Industrial  Co-operative  Society,  Ltd., 

Merritt,  B.  C. 
The  Workmans  Co-operative  Association,  Ltd.,  Nanaimo,  B,  C. 
The  Western  Canadian  Co-operative  Trading  Co.,  Ltd.,  Cole- 
man, Alta. 
The  Eckville  &  Gilby  Co-operative  Co.,  Ltd.,  Eckville,  Alta. 
The  St.  Paul  des  Metis  Farmers'  Co-operative  Society,  Ltd.,  St. 

Paul  des  Metis,  Alta. 
The  Regent  Co-operative  Exchange,  Ltd.,  Regent,  Man. 
The  Verdun  Social  Co-operative  Society,  Ltd.,  Verdun,  P.  Q. 
The  Cape  Breton  Co-operative  Society,  Ltd.,  Dominion,  N.  S. 

All  with  the  exception  of  St.  Paul  des  Metis,  Alta.,  Eckville, 
Alta.,  and  Regent,  Man.,  are  of  working  men,  the  last  named 
being  farmers'  organizations. 

The  Union,  through  its  secretary,  informs  and  advises  local 
organizers  of  co-operative  societies,  taking  care,  before  doing  so, 
as  far  as  possible,  to  see  that  the  promoters  are  not  self-ap- 
pointed, but  acting  as  the  elected  representatives  of  democratic 
bodies.  The  Union  also  has  for  the  last  eight  years  published  a 
small  monthly  magazine  known  as  the  "Canadian  Co-operator." 
For  educational  purposes,  this  is  supplied  in  bulk  to  the  affi- 
liated societies  at  the  cost  of  printing,  the  same  being  gratui- 
tously distributed  by  each  society  amongst  its  members. 

The  organized  Movement  in  Canada  is  still  on  a  very  small 
scale.  The  revenue  consequently  accruing  to  the  Union  from 
the  societies  is  too  small  at  present  to  provide  full  time  service 
of  capable  organizers  and  officials,  without  which,  over  so  large 
an  area,  it  is  not  possible  to  make  great  progress. 

There  are  a  great  many  co-operative  societies,  so  called,  in 
Canada,  besides  those  federated  with  the  Union.  Many  of 
them  are  no  doubt  genuine,  but  we  cannot  speak  as  to  any  which 
are  not  affiliated;  affiliation  being  evidence  to  the  public  that 
bona  fides  have  been  investigated.  Many,  particularly  agri- 
cultural, are  really  of  industrial  service,  but  not  co-operative, 
through  lack  of  knowledge  of  co-operative  principles.  In  the 
Canadian  west  there  are  some  organizations  in  connection  with 
the  Grain  Growers  Associations  of  Manitoba  and  Saskatche- 


APPENDIX   I  285 

wan,  and  the  United  Farmers  of  Alberta.  They  are  organized 
in  good  faith  in  the  interests  of  the  farmers.  They  have  been 
of  great  value  to  the  agricultural  industries  in  the  West,  but  in 
some  cases  are  deficient  in  an  efhcient  democratic  control  such 
as  is  demanded  by  co-operative  societies,  or  distribution  of 
surplus  revenues  do  not  closely  follow  recognized  co-operative 
principles. 

It  should  be  mentioned  that  in  the  province  of  Quebec  there 
have  been  successfully  organized  during  the  last  few  years  by 
Mr.  Alphonse  Desjardins  >■  of  La  Caisse  Populaire  de  Levis, 
Levis,  Que.,  a  considerable  number  of  small  credit  societies  or 
local  co-operative  banks;  indeed  Mr.  Desjardins  is  regarded  as 
the  father  of  this  phase  of  the  Movement  on  the  American 
continent  and,  at  the  request  of  Governor  Foss,  some  years  ago 
assisted  in  the  organizing  of  similar  societies  for  Massachusetts. 

That  co-operation  can  become  a  great  success  in  any  city, 
town  or  village  in  Canada  if  the  correct  principles  are  practised 
and  the  necessary  enthusiasm  displayed  by  the  people  is  proved 
by  the  achievements  of  the  British  Canadian  Co-operative  So- 
ciety at  Sydney  Mines,  N.  S. 

The  central  store  has  a  floor  space  of  15,555  square  feet,  and 
consists  of  basement  and  two  floors.  The  ground  floor  is  de- 
voted to  the  sale  of  groceries,  provisions  and  domestic  hardware. 
On  entering  the  store  there  is  found  on  the  left-hand  side  the 
office  for  the  receipt  of  the  cash  carriers,  and  recording  cash 
takings.  On  the  outside  of  the  ofl5ce  is  to  be  found  a  letter  box 
where  members  deposit  written  orders  for  goods  to  be  made  up 
and  delivered  by  the  delivery  wagons  in  due  course.  In  some 
parts  of  Canada  members  of  co-operative  societies  expect  daily 
and  even  more  frequent  delivery  of  small  orders,  and  sometimes 
orders  to  be  solicited,  which  involves  a  great  waste  of  their 
financial  resources.  In  Sydney  Mines  such  extravagant  habits 
as  to  service  are  not  tolerated.  If  people  wish  goods  to  be  de- 
livered they  can  only  have  a  service  twice  weekly.     On  the 

'  For  further  information  see  pamphlet,  The  Co-operative  People's 
Bank,  by  Alphonse  Desjardincs,  published  by  the  Division  of  Reme- 
dial Loans,  Russell  Sage  Foundation,  130  East  22nd  St.,  New  York, 
Price,  15  cents. 


286  APPENDIX   I 

ground  floor  the  first  counter  is  devoted  to  grocer  orders  which 
are  verbally  given,  and  then  made  up  and  handed  to  members 
who  wish  to  take  the  merchandize  away  with  them.  This  is 
where  the  pressure  seems  to  be  always  great,  and  in  order  to 
insure  that  every  member  is  served  in  his  or  her  turn,  each  puts, 
on  entering  the  store,  a  memorandum  book  in  a  letter  box  at 
the  counter.  Inside  the  book  the  customer's  membership  num- 
ber on  the  society's  roll  is  written.  When  an  assistant  has  made 
up  an  order  for  one  customer  he  goes  to  this  letter  box,  takes 
out  the  bottom  book,  calls  out  the  number,  and  proceeds  to 
make  up  the  order. 

The  store  also  has  a  meat  and  provision  department;  dry 
goods  and  other  departments,  a  new  bakery  and  a  sub- 
urban branch  at  which  150  members  trade.  The  society  has 
1005  members,  has  been  prosperous  for  more  than  ten  years 
and  now  pays  back  its  members  12  per  cent  on  their  purchases 
in  spite  of  the  fact  that  its  initial  prices  are  so  low  that  compet- 
ing tradesmen  urge  the  society  to  charge  higher  prices.  The 
society  owns  net  assets  of  $126,005.90  including  $1,329.57  worth 
of  stock  in  the  British  Wholesale  of  Manchester;  did  a  business 
during  the  six  months  ended  August  31,  1917  of  $251,963.68, 
or  about  half  a  million  dollars  per  year.  During  the  half  year 
256  new  members  have  been  added,  the  trade  increased 
$89,055.45.  This  miners'  society  appears  to  be  in  every  way 
successful. 

B.  CONSUMERS'  CO-OPERATION  IN  CALIFORNIA, 

Ernest  O.  F.  Ames,  President  Pacific  Co-Operative  League 

The  material  for  this  account  is  kindly  furnished  by  Mr. 
E.  O.  F.  Ames,  with  whom,  for  some  time,  I  have  been  in  com- 
munication. This  story  is  a  typical  one  of  struggle  and  dis- 
appointment, but  one  which  will,  we  trust,  have  a  happy 
ending. 

Rochdale  co-operation  started  in  California  about  eighteen 
years  ago.  The  first  store,  founded  in  1899,  was  located  at 
Dos  Palos  in  the  San  Joaquin  Valley.  Following  this  example 
and  assisted  by  the  Farmers'  Alliance,  other  Rochdale  stores 


APPENDIX    I  287 

were  promoted  in  difTcrent  parts  of  California,  and  the  move- 
ment even  spread  to  Oregon  and  the  Northwest. 

These  stores,  entirely  isolated  at  first,  were  very  successful 
and  there  seems  to  have  been  little  difficulty,  when  the  period 
of  inter-association  came,  in  establishing  a  wholesale. 

A  central  education^^l  committee  with  a  monthly  co-operative 
newspaper  was  established,  and  a  large  number  of  new  stores 
promoted  under  the  leadership  of  the  Rochdale  Wholesale 
Company.  The  stores  seemed  to  flourish  at  first,  and  to  pay 
dividends.  Capital  was  fairly  plentiful  and  business  brisk. 
In  a  few  years  nearly  one  hundred  stores  were  in  existence. 

It  would  appear,  however,  that  sufiicient  attention  was  not 
being  devoted  to  business-like  and  co-operative  methods.  The 
stores  were  not  loyal  to  their  wholesale,  and  many  of.  them  from 
the  very  first  gave  way  to  the  blandishments  of  the  drummer  and 
scattered  their  buying  among  all  the  other  wholesale  houses 
within  reach. 

The  co-operative  store  has  the  advantage  over  ordinary  retail 
stores — a  circle  of  ready-made  customers  who  should  have  a 
moral  as  well  as  a  financial  interest  in  the  welfare  of  the  store. 
In  order  to  preserve  this  advantage,  however,  and  to  maintain 
itself  in  the  fierce  struggle  for  existence  the  co-operative  must 
carry  on  an  aggressive  educational  campaign,  both  to  hold  the 
members  it  has  and  to  add  new  ones.  This  is  doubly  necessary 
where  the  store  must  withstand  the  powerful  opposition  of 
retail  merchants,  jobbers  and  their  associations. 

Unpreparedness  on  the  educational  side  seems  to  have  been 
the  trouble  in  California.  As  time  went  on  one  store  after  an- 
other failed.  The  Rochdale  Wholesale  Company  was  perhaps 
the  greatest  sufferer  in  these  reverses,  as  its  business  was  de- 
clining and  its  capital  was  largely  impaired  by  the  bad  debts  of 
its  defaulting  stores. 

"A  period  of  serious  stress  and  difficulty  set  in,  and  one 
wondered,"  says  Mr.  Ames,  "if,  after  all,  the  pessimists  could 
be  right  in  their  assertion  that  '  co-operation  was  not  congenial 
to  America';  that  'California  people  especially  were  not  suited 
to,  and  could  not  be  relied  upon  to  build  up  a  permanent  co- 
operative movement.' " 


28b  APPENDIX   I 

The  leaders  of  the  movement,  however,  would  not  accept  this 
verdict  and  they  struggled  earnestly  to  arrest  the  downward 
tendency.  Ways  and  means  were  sought  to  overcome  the  losses 
sustained  and  finally  a  plan  was  put  into  operation  whereby  a 
federation  of  retail  stores  were  united  onder  one  central  man- 
agement. 

This  federation,  known  as  the  California  Rochdale  Company, 
worked  in  close  co-operation  with  the  Rochdale  Wholesale  Com- 
pany. Its  purpose  was  to  make  all  new  stores  branches  of  the 
California  Rochdale  Company  and  to  bring  in  any  of  the  old 
stores  that  might  be  willing  to  federate.  Buying  was  to  be 
centralized  through  the  wholesale,  bookkeeping,  auditing  and 
educational  work  were  to  be  systematized  and  carried  out  regu- 
larly. The  plan  had  a  great  deal  to  recommend  it  and  might 
have  succeeded  if  it  had  been  consistently  pushed. 

Unfortunately,  however,  the  new  stores  were  not  run  on  a 
cash  basis,  the  educational  work  was  almost  nil  and  buying  was 
scattered  in  all  directions.  New  stores  were  opened  rather  too 
rapidly  to  be  properly  established  and  thoroughly  organized, 
and  although  money  came  in  from  the  sale  of  memberships 
very  freely,  there  was  insufficient  capital  to  pay  for  the  large 
stocks  carried  by  most  of  the  stores.  Members'  credit  accounts 
also  absorbed  considerable  capital. 

Suffice  it  to  say  that  in  less  than  two  years  this  movement, 
so  full  of  hope  at  the  beginning,  was  in  difficulties.  When  it 
failed  with  the  closing  of  its  ten  stores  it  left  affairs  in  a  worse 
condition  than  ever. 

The  old  independent  Rochdale  stores  remained,  greatly  dim- 
inished in  number  and  steadily  declining.  There  were  now  less 
than  thirty  of  the  original  hundred,  some  very  successful,  others 
moderately  so,  others  on  the  verge  of  failure. 

"The  many  failures,"  says  Mr.  Ames,  "could  all  be  traced  to 
lack  of  credit,  lack  of  educational  work,  absence  of  auditing  or 
any  systematic  bookkeeping  ...  an  attempt  to  get  the  re- 
maining stores  to  go  on  a  cash  basis  and  to  adopt  expert  auditing 
and  strict  bookkeeping  did  not  meet  with  much  success.  It  was 
also,  in  view  of  past  failures,  well-nigh  impossible  to  promote 
new  stores.     Co-operation  was  in  strong  disfavor.    Its  repr^- 


APPENDIX  I  289 

sentatives  were  in  danger  of  rough  treatment.  .  .  .  People 
asked  to  be  shown  that  co-operation  could  be  made  a  success. 
They  refused  to  assume  liability  for  any  more  losses  and  fail- 
ures." 

All  this  time  the  Rochdale  Wholesale  in  San  Francisco  was 
suffering  from  loss  of  business  and  loss  of  money  from  defaulting 
store  customers.  It  was  essential  to  stop  this  if  the  Wholesale 
company  was  to  continue. 

These  conditions  lead  to  the  founding  of  the  Pacific  Co- 
operative League.  A  small  nucleus  of  co-operators,  who  wished 
to  save  the  movement  and  build  its  future,  saw  the  necessity 
of  some  new  plan  of  operation  which  would  restore  co-operation 
and  provide  business  for  the  Wholesale. 

The  League  was  incorporated  in  19 13  under  the  state  cor- 
porative law,  with  two  kinds  of  members.  The  first,  called 
"Associate"  members,  paid  $5  admission  fee.  This  entitles  the 
member  to  the  privilege  of  buying  direct  small  quantities  of 
goods  at  wholesale  prices.  Through  this  associate  membership 
plan  it  is  possible  to  start  work  by  giving  immediate  co-operative 
benefits,  such  as  the  peo[)le  were  asking  for,  and  at  the  same 
time  relieve  them  from  any  fear  of  future  liability  in  case  of 
failure.  It  was  hoped  that  in  course  of  time  the  associate  mem- 
bership roll  would  produce  individuals  convinced  of  the  eco- 
nomic value  of  co-operation  and  desirous  of  becoming  closely 
committed  with  it. 

The  "Full"  membership  is  the  second  class  arranged  for  in 
the  League's  plan.  A  full  member  pays  $105,  obtains  one  vote 
and  shares  alike  in  the  responsibilities  of  managing  and  financial 
support  of  the  institution.  No  full  members  joined  at  first 
except  the  founders. 

During  the  course  of  four  years,  over  1,100  associate  members 
have  joined  the  League.  This  membership  has  spread  all  over 
the  northern  and  central  parts  of  California  and  even  into 
Nevada.  At  certain  points  near  San  Francisco,  local  buying 
clubs  have  grown  up.  These  so  bulk  their  orders  as  to  secure 
still  greater  benefits  in  the  way  of  prices,  freight  and  delivery 
charges.  The  League  supplies  a  large  quantity  of  coal  from 
Eastern  mines. 


290  APPENDIX   I 

The  strict  character  of  the  by-laws  has  compelled  considerable 
self-sacrifice  and  voluntary  work  on  the  part  of  the  founders. 
The  membership  capital  cannot  be  used  for  expenses  of  any 
kind,  so  it  was  necessary  for  the  incorporators  to  "dig  in"  and 
build  up  a  business  in  order  to  pay  salaries,  rent,  etc.  The 
operating  expenses  on  the  direct  selling  and  club  business  has 
been  less  than  6  per  cent. 

Below  are  given  the  sales  for  the  past  few  yearS;  and  the 
amount  received  in  associate  membership  fees: 

Sales  $5.00  Membership  Fees  Paid  in 

1913  2,926.60  496. 4o\ 

1914  39,593.04  1,663.7s )  Present  total 

1915  57,746.62  1,590.171    of  members 

1916  61,074.24  784. 02I     over  1,100 

1917  6  months       42,462.34  974.00/ 


Total  203,802.84 

Of  these  sales  two-thirds  are  groceries,  one-third  general 
merchandise;  gross  profit,  6  per  cent;  expense  of  operation,  5 
per  cent.    The  balance  is  spent  on  organizing  work. 

The  operation  of  the  League  at  its  central  ofiice  has  not  re- 
quired a  stock  of  goods.  Orders  have  been  filled  by  the  Roch- 
dale Wholesale  Company,  shipped  direct  to  the  consumer,  but 
billed  to  the  League.  The  Wholesale's  stock  has  thus  been 
used,  and  without  this  the  League's  plan  would  have  required 
considerable  capital  in  order  to  establish  a  warehouse  stock  of 
its  own.  Goods  that  the  Wholesale  does  not  handle,  such  as 
clothing,  furniture,  hardware,  etc.,  have  been  bought  by  the 
League  from  manufacturers  and  wholesalers  in  the  ordinary 
way. 

Business  starting,  as  has  been  seen,  by  selling  direct  to  con- 
sumers at  wholesale  prices,  has  developed  into  clubs  of  buyers  in 
many  places.  The  present  development  is  toward  local  stores 
selling  at  retail  prices  on  the  regular  Rochdale  plan.  In  each  case 
every  effort  will  be  made  to  educate  members,  and  the  same 
principle  of  earning  before  spending  will  be  rigidly  adhered  to 
in  all  local  branches. 


APPENDIX   I  291 

The  first  store  which  has  grown  out  of  the  League  work  sold 
$3,667  worth  of  goods  in  the  last  quarter  and  made  a  net  profit 
of  $307.  Forty  members  paid  up  $25  each  on  full  membership 
shares  before  the  store  was  opened,  as  the  management  of  the 
League  had  decided  that  forty  members  and  $1,000  was  the 
minimum  requirement  for  a  town  of  this  size.  A  local  Board  of 
Directors,  elected  by  the  members,  acts  as  management  com- 
mittee, but  the  store  manager  is  an  employee  selected  by  the 
central  management;  he  is  under  their  supervision  and  is 
bonded.  His  buying  is  also  turned  through  the  central  office 
for  approval  and  bulked  with  the  general  buying  for  the  League. 

"  It  will  be  seen,  therefore,"  says  Mr.  Ames,  "  that  the  League 
has  been  successful  in  its  efforts.  It  has  established  on  a  firm 
basis  a  solid  and  successful  co-operative  enterprise.  Whilst  the 
plan  of  operation  has  been  changed  somewhat  from  the  tradi- 
tional Rochdale  system,  yet  it  has  retained  the  principle  which 
has  never  been  violated. 

"The  purpose  of  the  Pacific  Co-operative  League  was  also 
to  succor  the  Co-operative  Wholesale.  This,  too,  has  been 
accomplished.  Co-operators  in  other  states  will  recognize  the 
tremendous  value  and  urgent  need  of  having  their  own  wholesale 
house  behind  them. 

"It  is  impossible  to  write  about  the  strivings,  the  sacrifices  of 
the  past  few  years,  and  of  the  many  dark  and  doubtful  days. 
The  weeks  and  months,  heavy  with  anxiety  and  struggle,  slowly 
made  up  the  tale  of  semi-annual  or  yearly  reports  which  came 
to  cheer  and  encourage  us.  We  have  surely,  if  slowly,  moved 
ahead. 

"Compared  with  what  is  yet  to  be  done,  our  progress  is,  of 
course,  slight.  Members  and  clubs  must  be  secured  by  the 
thousands.  We  must  revive  our  co-operati\-e  paper,  which  has 
been  suspended  several  years.  ^  Industries  must  be  organized. 
Several  new  stores  are  on  the  way. 

"We  must  train  up  a  force  of  expert  co-operative  workers, 
organizers,  managers  and  auditors.  This  is  one  of  the  things 
co-operators  must  ha\'e.  People  suitable  for  co-operative  work 
must  be  made;  they  are  rarely  born. 

'  It  has  now  been  decided  to  re-establish  this  in  January,  1918. 


292  APPENDIX   I 

"Perhaps  the  final  work  should  be  one  of  advice  to  others. 
Be  willing  to  start  small.  Do  not  despise  small  beginnings. 
Make  each  step  self-supporting  and  pay  your  way  as  you  go. 

Do  not  seek  publicity.  Let  the  work,  the  satisfied  members, 
talk.  Public  talk  often  arouses  more  opposition  than  it  does 
support." 

Mr.  Ames  tells  us  that  there  are  at  present  about  twenty-five 
stores  in  California,  not  all  of  which,  however,  buy  through 
the  Wholesale. 

C.  THE  NEW  ORLEANS  UNDERTAKING, 

BY  N.  0.  Nelson 

Mr.  N.  0.  Nelson,  the  veteran  co-operator,  founder  of  the 
large  co-operative  plumbing  supply  manufactory  at  Leclare, 
Illinois,  started  a  chain  of  co-operative  stores  in  and  about  New 
Orleans  a  few  years  ago.  This  enterprise.  Nelson  Co-operative 
Association,  Inc.,  has  61  retail  stores,  four  meat  markets,  large 
bakery,  pasteurizing  milk  plant,  coffee  factory,  condiment  fac- 
tory and  a  1,500-acre  farm. 

This  interesting  and  promising  enterprise  is  seeking  Rochdale 
ends,  but  not  quite  on  Rochdale  lines.  To  begin  with,  these 
numerous  stores  were  started  with  Mr.  Nelson's  capital  in 
order,  we  take  it,  to  get  the  advantage  of  large  volume  turn-over 
showing  marked  economies  before  inviting  the  main  capital 
subscriptions  from  consumers.  The  sales  are  now  between  two 
and  three  million  dollars  per  year  and  each  store  grows  in 
busmess  about  15  per  cent  per  year,  and  new  stores  are  added 
as  occasion  offers.  To  make  rapid  increase  of  trade  goods  are 
sold  at  low  prices  which  are  expected  to  yield  some  surplus  over 
expenses,  but  hardly  justify  dividend  on  purchases.  Stock  is 
now  offered  to  consumers,  the  plan  being  to  distribute  the 
ownership  and  make  the  organization  democratic. 

A  thing  of  special  interest  which  Mr.  Nelson  is  doing  is  to 
demonstrate  at  how  low  an  expense  goods  can  be  passed  from 
producer  to  consumer.  Some  of  his  stores  are  run  at  as  low  as 
six  per  cent  on  sales,  not  including  warehouse  and  general  office 
expenses.    It  is  Mr.  Nelson's  hope  to  reduce  all  expense  to  ten 


APPENDIX   I  293 

per  cent  of  sales.  If  this  is  done  it  will  be  a  gratifying  achieve- 
ment. This  will  not  include  delivery,  but  will  practically  include 
wholesaling  and  will  probably  mean  a  net  saving  to  consumers 
of  at  least  20  per  cent  on  retail  price.  From  a  letter  from  Mr. 
Nelson  dated  September  29,  191 7,  I  take  the  liberty  of  quoting 
the  following: 

"Consumers'  co-operation  depends  entirely  on  the  consumer. 
There  is  nothing  in  the  wide  world  so  perfectly  open  to  people 
to  act  for  themselves  and  save  15%  to  25%  on  their  cost  of 
living. 

"All  the  European  countries  are  doing  it  on  an  enormous 
scale,  running  into  millions  of  members  and  hundreds  of  millions 
of  sales,  now  over  a  billion  in  Great  Britain  alone,  and  it  has 
grown  more  during  the  war  than  ever  before,  in  Russia  more 
than  anywhere. 

"It  is  mere  indifference  and  carelessness  that  has  kept  it  from 
developing  in  the  United  States;  we  shall  come  to  it,  but  Amer- 
icans are  averse  to  anything  so  commonplace  and  commonsense 
as  a  co-operative  store  or  a  co-operative  factory." 

D.  AROUND  PITTSBURGH 

The  Tri-State  Association  embraces  about  a  dozen  stores  in 
Tennsylvania,  Ohio  and  West  Virginia,  some  of  which  do  a 
business  of  $120,000  per  year  or  more.  Among  these  are  some 
live  workers  and  it  is  hoped  they  may  make  a  success  of  their 
present  endeavor  to  unite  for  wholesale  dealing  to  save  on  the 
cost  of  at  least  a  part  of  their  purchases. 

E.  AMONG  THE  ILLINOIS  MINERS 

Of  the  third  annual  convention  of  the  Central  States  Co- 
operative Society  held  at  Stanton,  Illinois,  September  9,  10  and 
II,  1917,  Dr.  J.  P.  Warbasse,  president  of  the  Co-operative 
League  of  America,  wTites  enthusiastically  in  the  Co-Opcrative 
Consumer  for  September.  Dr.  Warbasse  reports  that  there 
are  fifty  co-operative  store  societies  in  Illinois  composed  mostly 
of  miners,  and  that  these  are  now  taking  active  steps  to  form  a 


294  APPENDIX   I 

co-operative  wholesale  society  at  Springfield.  The  Doctor  is 
much  impressed  by  keenness  and  evident  business  ability  of  the 
miners  who  took  part  in  the  convention  and  believes  this,  with 
the  earnestness  with  which  they  are  going  forward  means  much 
for  the  future  of  co-operative  buying  and  production.  This 
faith  is  strengthened  by  consideration  of  the  many  achievements 
of  some  of  the  local  societies  in  the  way  of  erecting  buildings, 
giving  mutual  aid  and  so  on.  There  seems  to  be  here  much  of 
the  kind  of  social  and  mutual  welfare  work  which  characterizes 
co-operation  in  Belgium  and  some  other  European  countries. 

F.  THE  MOVEMENT  IN  THE  NORTH  WESTERN 
STATES 

Some  eight  years  ago  there  was  formed  in  Minneapolis  what 
was  called  the  "Right  Relationship  League"  for  the  purpose 
of  promoting  co-operative  societies.  This  organization  planted, 
we  believe,  nearly  two  hundred  stores.  Their  plans  were  to  go 
into  a  town,  get  an  option  on  a  store  with  agreement  to  pay  the 
organizer  a  commission  in  case  of  sale.  They  then  started  out 
to  get  members  to  buy  shares,  usually  at  $ioo  each. 

This  plan  has  been  criticised  as  too  commercial.  However, 
the  form  of  organization  appears  to  be  strictly  in  accordance 
with  Rochdale  principles  except,  perhaps,  leaving  much  to  be 
desired  as  to  assurance  that  adequate  education  in  Rochdale 
principles  and  promotion  of  co-operative  spirit  will  be  carried 
on  among  members.  We  are  glad  to  present  the  following  from 
Mr.  Tousley  who  was  one  of  the  founders  of  the  Right  Relation- 
ship League,  now  no  longer  in  existence. 

CONSUMERS'  CO-OPERATION  AND  PROSPECTS 
BY  E.  M.  Tousley 

AMERICAN  ROCHDALE  LEAGUE 

The  consumers'  co-operative  store  movement  of  the  North- 
west has  made  some  rapid  strides  during  the  past  year.  The 
American  Rochdale  League  has  organized  some  ten  Rochdale 


APPENDIX   I  295 

stores  in  North  and  South  Dakota.  The  following  are  some 
conservative  figures  for  these  stores: 

Membership,  944;  paid  in  capital,  $151,800.00;  the  annual 
sales  will  aggregate  between  $900,000.00  and  $1,000,000.00. 
All  except  one  are  being  audited  monthly  by  the  auditing  de- 
partment of  the  League.  The  figures  reported  as  to  expenses 
and  gross  earnings  would  indicate  that  all  of  them  will  have  a 
nice  balance  on  the  right  side  of  the  ledger  at  the  end  of  the 
year,  and  there  is  a  strong  tendency  to  get  together  in  their 
buying. 

One  of  the  greatest  weaknesses  in  farmers'  co-operative  stores 
in  the  Northwest  in  past  years  has  been  that  of  the  credit  sys- 
tem. While  the  by-laws  adopted  invariably  call  for  the  business 
to  be  transacted  upon  a  basis  of  cash  or  its  equivalent,  a  great 
many  of  the  stores  in  the  country  towns  have  broken  the  rule. 
The  League  has  endeavored  to  arrange  a  system  to  abolish  this 
evil,  and  to  get  the  people  to  use  it. 

The  new  plan  calls  for  the  stockholders  and  customers  to 
deposit  cash  in  advance  for  their  needs  for  a  month,  borrowing 
the  money  at  the  bank  at  the  going  rate  of  interest,  if  necessary. 
The  store  then  furnishes  each  customer  with  a  (merchandise) 
check  book,  which  the  customers  use  on  the  same  principle  as 
a  bank  check  book,  the  store  returning  the  cancelled  checks  and 
a  statement  of  account  at  the  end  of  each  month,  allowing  a  2% 
discount  for  all  cash  deposited  in  advance.  This  discount  more 
than  pays  the  interest  on  the  sums  borrowed  by  the  customers 
at  the  bank.  If  the  customer's  financial  standing  is  not  good 
enough  to  get  the  money  at  the  bank,  there  is  no  reason  why 
the  store  should  trust  him.  This  plan  has  worked  out  well 
wherever  tried,  but  space  will  not  permit  a  full  description  of 
all  details. 

So  far  as  can  be  learned  there  has  possibly  been  organized 
upwards  of  50  stores  during  the  past  year  in  the  states  north 
and  west  of  Illinois.  These,  together  with  some  300  or  more 
stores  previously  in  existence,  shows  the  demand  for  co-operation 
in  the  West  and  its  healthy  growth.  These  stores  are  doing  an 
annual  business  of  several  millions  of  dollars  with  net  earnings 
runnino;  into  the  hundreds  of  thousands  of  dollars.     In  these 


296  APPENDIX   I 

strenuous  war  times  when  the  government  is  calling  for  economy 
in  all  directions  and  imploring  middlemen  to  volunteer  to  cease 
their  exploitation  of  the  consumers,  it  does  not  require  the  eye 
of  a  prophet  to  see  that  if  these  stores  would  get  together  in 
the  ownership  and  operation  of  their  own  jobbing  and  wholesale 
agencies,  a  very  large  additional  percentage  could  be  saved  to 
the  people  and  be  available  for  investment  in  war  bonds, 
or  food  and  fuel  necessities,  rather  than  dissipated  in  com- 
petitive waste  or  selfishly  accumulated  in  the  hands  of  the 
middlemen. 

Developments  along  the  lines  of  agricultural  co-operation 
during  the  past  year  have  been  even  more  active  than  the  store 
movement.  The  County  Agent  Movement  under  the  super- 
vision of  the  Government,  the  states  and  the  counties,  is  be- 
coming very  extensive  and  effective.  The  activities  of  the 
county  agents,  farmers'  clubs,  and  the  local  units  of  various 
other  farmer  organizations  are  rapidly  covering  the  entire 
country.  The  only  regrettable  feature  about  the  situation  is 
that  so  many  of  these  organizations  are  antagonistic  to  each 
other,  except  the  county  agent  movement,  rather  than  co- 
operating with  each  other.  It  is  to  be  hoped  that  some  day 
personal  aggrandizement  and  selfishness  may  be  buried  so  deeply 
that  the  names  of  these  various  organizations  may  be  forgotten, 
and  the  people  all  get  together  for  effective  work  in  genuinely 
co-operating  in  both  the  marketing  of  farm  products  and  sup- 
plying the  needs  of  consumers;  also  in  bringing  the  agricultural 
co-operative  producers  of  the  West  into  direct  business  contact 
with  the  consumers  of  the  whole  country.  However,  the  agri- 
cultural interests  are  further  advanced  in  co-operative  organ- 
ization than  are  the  consumers  of  the  large  cities.  The  latter 
should  make  every  endeavor  to  catch  up. 

LEGISLATION 

During  the  past  winter  the  Legislature  of  the  State  of  North 
Dakota  improved  its  co-operative  law  materially  by  passing 
a  new  statute,  Flouse  Bill  Number  Ninety-Nine.  This  law 
follows  quite  closely  the  co-operative  law  of  Wisconsin,  passed 


APPENDIX   I  297 

in  191 1,  of  which  latter  law  the  \\Titer  is  the  author. »  Perhaps 
no  serious  criticism  of  this  law  can  be  made  except  that  which 
may  be  made  of  the  co-operative  laws  passed  by  various  other 
states  during  the  past  few  years,  which  limits  the  amount  of 
stock  which  a  single  individual  may  own  to  $1,000.00.  Such  a 
limitation  should  be  in  no  co-operative  law.  With  the  vote 
limited  to  one  per  stockholder  and  the  earnings  divided  in  pro- 
portion to  patronage,  after  allowing  a  reasonable  rate  on  capital 
invested,  there  is  no  reason  whatever  for  limiting  the  investment 
of  individuals.  If  a  man  possesses  enough  co-operati\'e  spirit  to 
be  willing  to  invest  $2,000.00  or  $5,000.00  or  $10,000.00,  why 
not  let  him  invest  it  as  an  aid  to  the  co-operative  movement, 
inasmuch  as  past  experience  shows  that  many  failures  have  been 
caused  on  account  of  a  lack  of  sufficient  working  capital. 

The  prospect:  On  the  whole  the  prospect  for  the  future  of 
consumers'  co-operation  in  this  section  is  brighter  than  for  some 
years.  The  people  themselves  are  beginning  to  think  and  to 
draw  lessons  from  experiences  of  the  past,  the  most  valuable 
ones  being  from  failures  of  \^arious  sorts. 

Nevertheless,  it  seems  to  me  that  co-operative  endeavor  in 
the  store  line  has  reached  out  and  is  now  passing  through  some- 
what of  a  crisis.  Democracy  in  business  in  America  is  on  trial. 
It  has  powerful  and  insidious  opponents,  within  and  without. 
So  far  the  co-operative  store  people  have  utterly  failed  to  es- 
tablish any  sort  of  a  wholesale  on  a  sound,  practicable  business 
basis.  Does  this  prove  that  "Democracy  in  business"  in  Amer- 
ica is  futile?  At  least  futile  in  its  endeavors  to  take  any  but 
the  first  step  toward  the  goal  it  must  attain  if  it  is  to  become 
effective  and  permanent?  There  are  now  possibly  more  than 
one  thousand  co-operatives  stores  in  the  country,  but  with  the 
exception  of  some  contract  buying,  or  the  buying  of  small  job 
lots  of  groceries,  or  an  occasional  carload  of  staple  stuff,  these 
stores  have  not  only  failed  to  unite,  but  in  a  majority  of  cases, 
each  one  is  in  ignorance  of  the  existence  of  the  others.  Efforts 
to  federate  them  in  their  buying  capacity  have  been  met  with 
either  suspicion  of  each  other  and  of  the  motives  of  the  leaders, 
selfishness  and  ignorance  on  the  part  of  local  managers,  financial 
^  See  Appendix  III. 


298  APPENDIX   I 

short-comings,  or  narrowness  on  the  part  of  officials  of  the 
particular  propaganda  body  which  brought  them  into  existence; 
also,  an  almost  universal  tendency  to  shirk  responsibility,  being 
unwilling  to  participate  in  any  enterprise  unless  guarantees  of 
financial  success  and  profit  are  assured  from  some  source  outside 
themselves.  In  other  words,  they  are  "dividend  chasers,"  not 
co-operators. 

In  the  meantime  what  is  happening  in  the  mercantile  world? 
Extensive  and  efficient  chain-store  systems,  controlled,  supplied, 
and  operated  from  a  common  center  have  been  inaugurated  by 
different  groups  of  capitalists.  Extremely  large  purchasing 
power  enables  these  stores  to  sell  their  goods  very  cheap.  This 
begets  disloyalty  on  the  part  of  the  stockholders  of  the  co- 
operative store,  and,  if  allowed  to  continue  indefinitely  will 
result  in  failure  of  the  store  and  the  reiteration  of  the  cry:  "Co- 
operation is  a  fraud  and  a  failure."  Whereas  the  only  failure 
involved  is  the  failure  to  co-operate  as  perfectly  and  as  efficiently 
as  the  capitalists.  "Co-operation  may  be  betrayed  but  it  has 
never  betrayed  anyone." 

This  brings  us  to  the  very  logical  and  practical  question: 
Can  the  mercantile  business  be  organized,  controlled  and  oper- 
ated as  efficiently  on  the  democratic  (by  the  people's  equal  vote) 
as  on  the  capitalistic  basis?  If  this  question  be  answered  in 
the  affirmative,  a  second  question  is  in  order:  "When  will  the 
thousands  of  people  now  owning  shares  in  local  retail  stores  be 
ready  to  cast  aside  petty  prejudices  and  all  other  differences, 
real  and  fancied,  make  such  sacrifices,  personal  and  financial 
as  may  be  necessary,  and  actually  unite  these  local  units  into 
several  district  agencies,  and  the  district  agencies  finally  into 
one  solid,  efficient,  genuinely  co-operative  wholesale  federation, 
or  union,  capitalized,  operated  and  loyally  patronized  by  all 
the  retail  units? 

I,  for  one,  am  willing  to  make  almost  any  sacrifice,  and  to 
make  every  endeavor,  to  accomplish  this  greatly  to  be  desired 
end  in  the  immediate  future. 

In  conclusion,  then,  as  to  the  outlook  for  Co-operation  in 
distribution,  let  me  say: 

First.  That  the  people  never  seemed  more  ready  for  it  locally, 


APPENDIX   I  299 

than  now,  and  that  it  must  be  made  effective  because  arbitrary 
governmental  price-fixing  of  all  commodities  in  all  stages  of 
their  journey  from  producer  to  consumer  is  impracticable,  and 
unsatisfactory  to  everybody,  while,  on  the  other  hand,  Co- 
operation is  the  only  alternative  between  dominant  capitalism 
and  revolutionary  syndicalism.    (I.  W.  W.) 

Secondly.  The  farmers  of  the  Northwest  have  quite  generally 
learned  their  co-operative  lesson  through  their  expensive  expe- 
rience in  their  fight  against  the  old-line-elevator  system.  That 
fight  has  shown  them  that  the  formation  of  local  units  (co- 
operative elevator  companies)  only,  did  not  give  sufficient 
power,  hence  the  organization  of  State  Associations  and  a 
National  Association,  and  now,  terminal  elevators.  They  have 
long  since  discovered  that  the  fight  of  one  was  the  concern  of 
all.  The  more  fierce  the  fight  became  the  clearer  became  the 
necessity  of  larger  and  more  efiicient  federation.  This  lesson 
they  are  now  beginning  to  think  of  applying  to  their  stores  and 
other  co-operative  activities.  Presumably  concrete  results  will 
follow  within  two  to  five  years  more.  Economic  conditions  at 
the  present  time  are  creating  the  most  vicious  kind  of  unrest 
ever  known  in  the  history  of  our  country.  True  patriotism, 
to  say  nothing  of  the  ethics  involved,  would  indicate  that  it 
becomes  an  imperative  national  and  social  necessity  to  quiet 
the  unrest  and  to  employ  the  energies  of  the  thinking  masses 
in  a  constructive  movement  which  shall  make  for  justice,  de- 
mocracy, humanity  and  peace. 

Minneapolis,  Minn. 


<^^  - 


APPENDIX  II 

SAMPLE  LAW;  CERTIFICATE  OF  INCORPORATION 
AND  BY-LAWS 

A.  WISCONSIN  CO-OPERATIVE  LAW 

Chapter  368,  Laws  of  191  i 

An  Act  to  create  sections  i786e-i  to  I786e-i7,  inclusive,  of 
the  statutes,  relating  to  the  incorporation  of  co-operative  asso- 
ciations, and  the  fees  to  be  paid  therefor. 

The  people  of  the  State  of  Wisconsin,  represented  in  Senate 
and  Assembly,  do  enact  as  follows: 

Section  i.  There  are  added  to  the  statutes  seventeen  new 
sections  to  read:  Section  17866-1.  Any  number  of  persons,  not 
less  than  five,  may  associate  themselves  as  a  co-operative  as- 
sociation, society,  company,  or  exchange,  for  the  purpose  of 
conducting  any  agricultural,  dairy,  mercantile,  mining,  manu- 
facturing or  mechanical  business  on  the  co-operative  plan. 
For  the  purposes  of  this  act,  the  words  "association,"  "com- 
pany," "corporation,"  "exchange,"  "society,"  or  "union," 
shall  be  construed  to  mean  the  same. 

Section  17866-2.  They  shall  sign  and  acknowledge  written 
articles  which  shall  contain  the  name  of  said  association  and 
the  names  and  residences  of  the  persons  forming  the  same. 
Such  articles  shall  also  contain  a  statement  of  the  purpose  of 
the  association  and  shall  designate  the  city,  town  or  village 
where  its  principal  place  of  business  shall  be  located.  Said 
articles  shall  also  state  the  amount  of  capital  stock,  the  number 
of  shares  and  the  par  value  of  each. 

Filing 

Section  17866-3.  The  original  articles  of  incorporation  or- 
ganized under  this  act  or  a  true  copy  thereof,  verified  as  such 


302  APPENDIX   II 

by  the  affidavits  of  two  of  the  signers  thereof,  shall  be  filed  with 
the  secretary  of  state.  A  like  verified  copy  of  such  articles  and 
certificates  of  the  secretary  of  state,  showing  the  date  when 
such  articles  were  filed  with  and  accepted  by  the  secretary  of 
state,  within  thirty  days  of  such  filing  and  acceptance  shall  be" 
filed  with  and  recorded  by  the  register  of  deeds  of  the  county 
in  which  the  principal  place  of  business  of  the  corporation  is 
to  be  located,  and  no  corporation  shall,  until  such  articles  be 
left  for  record,  have  legal  existence.  The  register  of  deeds  shall 
forthwith  transmit  to  the  secretary  of  state  a  certificate  stating 
the  time  when  such  copy  was  recorded.  Upon  receipt  of  such 
certificate  the  secretary  of  state  shall  issue  a  certificate  of  in- 
corporation. 

Section  i786e-4.  For  filing  of  articles  of  incorporation  of 
corporations  organized  under  this  act,  there  shall  be  paid  the 
secretary  of  state  ten  dollars  and  for  the  filing  of  an  amendment 
to  such  articles,  five  dollars.  For  recording  copy  of  such  articles 
the  register  of  deeds  shall  receive  a  fee  of  twenty-five  cents  to 
be  paid  by  the  person  presenting  such  papers  for  record. 

Section  17866-5.  Every  such  association  shall  be  managed 
by  a  board  of  not  less  than  five  directors.  The  directors  shall 
be  elected  by  and  from  the  stockholders  of  the  association  at 
such  time  and  for  such  term  of  office  as  the  by-laws  may  pre- 
scribe, and  shall  hold  office  for  time  for  which  elected  and  until 
their  successors  are  elected  and  shall  enter  upon  the  discharge 
of  their  duties;  but  a  majority  of  the  stockholders  shall  have  the 
power  at  any  regular  or  special  stockholders'  meeting,  legally 
called,  to  remove  any  director  or  officer  for  cause,  and  fill  the 
vacancy,  and  thereupon  the  director,  or  officer  so  removed  shall 
cease  to  be  a  director  of  said  association.  The  officers  of  every 
such  association  shall  be  a  president,  one  or  more  vice-presidents, 
a  secretary  and  a  treasurer,  who  shall  be  elected  annually  by 
the  directors,  and  each  of  said  officers  must  be  a  director  of  the 
association.  The  office  of  secretary  and  treasurer  may  be  com- 
bined, and  when  so  combined  the  person  filling  the  office  shall 
be  secretary-treasurer. 

Section  17866-6.  The  association  may  amend  its  articles  of 
incorporation  by  a  majority  vote  of  its  stockholders  at  any  regu- 


APPENDIX  II  303 

lar  stockholders'  meeting,  or  at  any  special  stockholders'  meeting 
called  for  that  puqiosc,  on  ten  days'  notice  to  the  stockholders. 
Said  power  to  amend  shall  include  the  power  to  increase  or 
diminish  the  amount  of  capital  stock  and  the  number  of  shares. 
Provided,  the  amount  of  the  capital  stock  shall  not  be  dimin- 
ished below  the  amount  of  paid-up  capital  at  time  amendment 
is  adopted.  Within  thirty  days  after  the  adoption  of  an  amend- 
ment to  its  articles  of  incorporation,  an  association  shall  cause 
a  copy  of  such  amendment  adopted  to  be  recorded  in  the  oflSce 
of  the  secretary  of  state  and  of  the  register  of  deeds  of  the 
county  where  the  principal  place  of  business  is  located. 

Section  i786e-7.  An  association  created  under  this  act  shall 
have  power  to  conduct  any  agricultural,  dairy,  mercantile, 
mining,  manufacturing  or  mechanical  business,  on  the  co- 
operative plan  and  may  buy,  sell  and  deal  in  the  products  of 
any  other  co-operative  company  heretofore  organized  or  here- 
after organized  under  the  provisions  of  this  act. 

Limitation  of  Investment  and  Voting  Powers 

Section  i786e-8.  No  stockholder  in  any  such  association  shall 
own  shares  of  a  greater  par  value  than  one  thousand  dollars,  ex- 
cept as  hereinafter  provided,  or  be  entitled  to  more  than  one  vote. 

Section  i786e-9.  At  any  regular  meeting,  or  any  regularly 
called  special  meeting,  at  which  at  least  a  majority  of  all  its 
stockholders  shall  be  present,  or  represented,  an  association 
organized  under  this  act  may,  by  a  majority  vote  of  the  stock- 
holders present  or  represented,  subscribe  for  shares  and  invest 
its  reserve  fund,  or  not  to  exceed  twenty-five  per  cent  of  its 
capital,  in  the  capital  stock  of  any  other  co-operative  associa- 
tion. 

Section  i786e-io.  Whenever  an  association,  created  under 
this  act,  shall  purchase  the  business  of  another  association, 
person  or  persons,  it  may  pay  for  the  same  in  whole  or  in  part 
by  issuing  to  the  selling  association  or  person,  shares  of  its 
capital  stock  to  an  amount,  which  at  par  value  would  equal  the 
fair  market  value  of  the  business  so  purchased,  and  in  such 
case  the  transfer  to  the  association  of  such  business  at  such 


304  APPENDIX  n 

valuation  shall  be  equivalent  to  payment  in  cash  for  the  shares 
of  stock  so  issued. 

Section  17866-11.  In  case  the  cash  value  of  such  purchased 
business  exceeds  one  thousand  dollars,  the  directors  of  the  as 
sociation  are  authorized  to  hold  the  shares  in  excess  of  one 
thousand  dollars  in  trust  for  the  vendor  and  dispose  of  the  same 
to  such  persons,  and  within  such  times  as  may  be  mutually 
satisfactory  to  the  parties  in  interest,  and  to  pay  the  proceeds 
thereof  as  currently  received  to  the  former  owner  of  said  busi- 
ness. Certificates  of  stock  shall  not  be  issued  to  any  subscriber 
until  fully  paid,  but  the  by-laws  of  the  association  may  allow 
subscribers  to  vote  as  stockholders;  provided,  part  of  the  stock 
subscribed  for  has  been  paid  in  cash. 

Section  17866-12.  At  any  regularly  called  general  or  special 
meeting  of  the  stockholders,  a  written  vote  received  by  mail 
from  any  absent  stockholder  and  signed  by  him  may  be  read 
in  such  meeting  and  shall  be  equivalent  to  a  vote  of  each  of  the 
stockholders  so  signing;  provided,  he  has  been  previously  noti- 
fied in  writing  of  the  exact  motion  or  resolution  upon  which 
such  vote  is  taken  and  a  copy  of  same  is  forwarded  with  and 
attached  to  the  vote  so  mailed  by  him. 

Division  of  Profits 

Section  17866-13.  The  directors,  subject  to  revisions  by  the 
association  at  any  general  or  special  meeting,  shall  apportion 
the  earnings  by  first  paying  dividends  on  the  paid-up  capital 
stock  not  exceeding  six  per  cent  per  annum,  then  setting  aside 
not  less  than  ten  per  cent  of  the  net  profits  for  a  reserve  fund 
until  an  amount  has  accumulated  in  said  reserve  fund  equal  to 
thirty  per  cent  of  the  paid-up  capital  stock,  and  five  per  cent 
thereof  for  an  educational  fund  to  be  used  in  teaching  co-opera- 
tion, and  the  remainder  of  said  net  profits  by  uniform  dividend 
upon  the  amount  of  purchases  of  shareholders  and  upon  the 
wages  and  salaries  of  employes,  and  one-half  of  such  uniform 
dividend  to  non-shareholders  on  the  amount  of  their  purchases, 
which  may  be  credited  to  the  account  of  such  non-shareholders 
on  account  of  capital  stock  of  the  association;  but  in  productive 
association  such  as  creameries,  canneries,  elevators,  factories 


APPENDIX   II  305 

and  the  like,  dividends  shall  be  on  raw  material  delivered  instead 
of  on  goods  purchased.  In  case  the  association  is  both  a  selling 
and  a  productive  concern,  the  dividends  may  be  both  on  raw  ma- 
terial delivered  and  on  goods  purchased  by  patrons. 

Section  I786e-i4.  The  profits  or  net  earnings  of  such  asso- 
ciation shall  be  distributed  to  those  entitled  thereto,  at  such 
times  as  the  by-laws  shall  prescribe,  which  shall  be  as  often  as 
once  in  twelve  months.  If  such  association,  for  five  consecutive 
years  shall  fail  to  declare  a  dividend  upon  the  shares  of  its 
paid-up  capital,  five  or  more  stockholders,  by  petition,  setting 
forth  such  fact,  may  apply  to  the  circuit  court  of  the  county, 
wherein  is  situated  its  principal  place  of  business  in  this  state, 
for  its  dissolution.  If,  upon  hearing,  the  allegations  of  the  peti- 
tion are  found  to  be  true,  the  court  may  adjudge  a  dissolution 
of  the  association. 

Annual  Reports 

Section  17866-15.  Every  association  organized  under  the 
terms  of  this  act  shall  annually,  on  or  before  the  first  day  of 
March  of  each  year,  make  a  report  to  the  secretary  of  state; 
such  report  shall  contain  the  name  of  the  company,  its  principal 
place  of  business  in  this  state,  and  generally  a  statement  as  to 
its  business,  showing  total  amount  of  business  transacted, 
amount  of  capital  stock  subscribed  for  and  paid  in,  number  of 
stockholders,  total  expenses  of  operation,  amount  of  indebted- 
ness or  liabilities;  and  its  profits  and  losses. 

Section  17866-16.  All  co-operative  corporations,  companies, 
or  associations  heretofore  organized  and  doing  business  under 
prior  statutes,  or  which  have  attempted  to  so  organize  and  do 
business,  shall  have  the  benefit  of  all  of  the  provisions  of  this 
act,  and  be  bound  thereby  on  filing  with  the  secretar>'  of  state 
a  written  declaration  signed  and  sworn  to  by  the  president  and 
secretary  to  the  effect  that  said  co-operative  company  or  asso- 
ciation has  by  a  majority  vote  of  its  stockholders  decided  to 
accept  the  benefits  of  and  to  be  bound  by  the  provisions  of  this 
act.  No  association  organized  under  this  act  shall  be  required 
to  do  or  perform  anything  not  specifically  required  herein,  in 
order  to  become  a  corporation  or  to  continue  its  business  as  such. 


306  APPENDIX  n  ^ 

Prohibiting  Counterfeits 

Section  17866-17.  No  corporation  or  association  hereafter 
organized  or  doing  business  for  profit  in  this  state  shall  be  en- 
titled to  use  the  term  "co-operative"  as  part  of  its  corporate 
or  other  business  name  or  title,  unless  it  has  complied  with  the 
provisions  of  this  act;  and  any  corporation  or  association  violat- 
ing the  provisions  of  this  section  may  be  enjoined  from  doing 
business  under  such  name  at  the  instance  of  any  stockholder 
of  any  association  legally  organized  hereunder. 

Section  2.  This  act  shall  take  effect  and  be  in  force  from 
and  after  its  passage  and  publication. 

B.  CERTIFICATE  OF  INCORPORATION  ' 

We,  the  undersigned,  for  the  purpose  of  forming  a  corporation 
under  and  pursuant  to  an  act  of  the  Legislature  of  the  State  of 
New  Jersey,  entitled,  "An  Act  to  Provide  for  the  Formation 
and  Regulation  of  Co-operative  Societies  of  Working-men," 
approved  March  loth,  1884,  and  the  acts  amendatory  thereof, 
and  supplemental  thereto,  do  hereby  certify  as  follows: 

Firsi:  The  names  assmned  to  designate  such  society  and  to 
be  used  in  its  business  and  dealings  is  Co-operative 

Society. 

Second:  The  place  or  places  in  this  state  where  the  business 
of  such  society  is  to  be  conducted  are  the  Town  of 
and  other  municipalities  in  the  County  of  ,  and 

adjoining  counties.    The  location  of  the  principal  office  is  at 
No.        ,  Avenue,  in  said  ,  and 

is  the  agent  in  charge  thereof. 

Third:  The  objects  for  which  the  society  is  formed  are,  the 
trading  and  dealing  in  goods,  wares,  merchandise  and  chattels, 
and  the  carrying  on  in  connection  therewith  of  any  lawful 
mechanical,  manufacturing,  or  trading  business. 

Fourth:  The  total  amount  of  capital  stock  of  such  society  is 
One  hundred  thousand  ($100,000)  Dollars.  The  number  of 
shares  into  which  the  same  is  divided  is  Ten  thousand  (10,000), 

1  The  certificate  of  a  society  organized  under  the  New  Jersey  Law 


APPENDIX   II  307 

The  par  value  of  each  share  is  Ten  ($10)  dollars.  The  shares 
may  be  paid  for  in  full  at  the  time  of  subscription  or  by  instal- 
ments. If  paid  for  by  instahnents  there  shall  be  paid  in  cash 
not  less  than  Two  ($2)  Dollars  on  each  share  at  the  time  of 
subscription,  and  not  less  than  One  ($1)  Dollar  per  month 
thereafter.  Provided,  however,  that  no  person  shall  at  any 
time  hold  more  than  one  share  on  which  any  instahnent  shall 
be  unpaid.  No  person  shall  at  any  time  hold  more  than  one 
hundred  (100)  shares.  The  number  of  shares  subscribed  is 
thirty-five  (35),  and  the  amount  actually  paid  in  cash  on  ac- 
count of  the  same  is  Three  hundred  and  fifty  (S350)  Dollars. 

Fifth:  Members  shall  be  admitted  only  upon  being  proposed 
and  seconded  by  e.xisting  members,  and  accepted  by  vote  of 
the  Board  of  Directors. 

Sixth:  The  profits  shall  at  the  end  of  each  calendar  year  be 
applied  as  follows: 

1.  A  sum  equal  to  five  (5%)  per  centum  of  the  net  profits 
shall  be  annually  appropriated  for  a  contingent  or  sinking  fund, 
and  such  appropriation  shall  continue  to  be  annually  made 
until  there  shall  be  accumulated  a  sum  equal  to  thirty  (30%) 
per  centum  of  the  capital  stock  of  the  society,  and  as  much 
longer  as  the  Board  of  Directors  shall  see  fit. 

2.  A  dividend  at  the  rate  of  six  (6%)  per  cent  per  annum  shall 
then  next  be  paid  upon  all  the  shares  of  stock  which  have  been 
outstanding  and  fully  paid  during  the  whole  of  the  calendar  year, 
and  one-half  such  amount  upon  shares  which  have  been  out- 
standing and  fully  paid  during  the  last  half  of  the  calendar  year. 
Such  dividend  shall  be  cumulative,  but  may  be  deferred  in  the 
judgment  of  the  Board  of  Directors. 

3.  After  the  foregoing  provisions  have  been  made  for  such 
contingent  or  sinking  fund  and  for  such  cumulative  dividends 
the  Board  of  Directors  shall  declare  out  of  the  remaining  profits 
a  dividend  to  the  shareholders  not  in  arrears  upon  the  instal- 
ments on  their  shares  in  proportion  to  the  purchases  made  by 
such  shareholders  during  the  past  year.  The  directors  may  at 
the  same  time  declare  a  dividend  at  not  exceeding  one-half  the 
rate  paid  upon  the  purchases  of  the  members  of  the  society,  to 
non-members  of  the  society  in  proportion  to  the  amount  of  their 


308  APPENDIX  n 

respective  purchases.  The  Board  of  Directors  may  limit  the 
participation  in  such  dividends  to  any  class  or  classes  of  pur- 
chases, and  may  provide  that  other  classes  of  purchases  shall 
be  non-participating. 

4.  The  rate  of  dividend  on  shareholders'  purchases  shall  be  a 
whole  number  per  cent  to  be  ascertained  by  dividing  the  profits 
applicable  thereto  by  the  amount  of  participating  purchases  of 
shareholders,  plus  twice  the  amount  of  participating  purchases 
of  non-shareholders,  and  disregarding  the  fractional  remainder, 
which  fractional  remainder,  and  remaining  profits,  if  any,  shall 
be  added  to  the  surplus  of  the  society. 

Seventh:  The  certificate  of  association  may  be  amended  in 
the  manner  provided  by  the  General  Corporation  Act  of  the 
state  for  amendments  and  changes  after  organization  of  cor- 
porations organized  thereunder,  so  far  as  the  same  may  be 
applicable  thereto,  provided,  however,  certificates  of  such 
amendments  and  changes  shall  be  filed  in  every  office  where  the 
original  certificate  of  association  shall  have  been  filed. 

The  By-Laws  of  the  society  may  be  altered  and  amended  by 
vote  of  a  majority  of  those  present,  being  a  quorum  as  provided 
in  the  By-Laws,  at  any  meeting  of  the  stockholders  provided 
one  (i)  week's  notice  by  mail  has  been  given,  such  notice  to 
state  in  full  the  language  of  the  proposed  amendment. 

In  witness  whereof,  we  have  hereunto  set  our  hands  and 
seals  this  day  of  March,  19 12. 

In  presence  of: 

(N.  J.  acknowledgment.) 

C.  BY-LAWS  » 
Article  I 

NAME 

Section  i.  The  name  of  this  corporation  shall  be  the 
Co-operative  Society,  and  such  name  shall  be  kept  painted  or 
affixed  on  the  outside  of  every  office  or  place  in  which  the  business 

1  The  by-laws  of  a  society  organized  under  the  New  Jersey  Law. 


APPENDIX   II  309 

of  the  Society  is  carried  on  in  a  conspicuous  position  in  letters 
easily  legible. 

Section  2.  The  registered  office  of  this  Society  shall  be  at 
No.       ,  Avenue,  and  notice  of  any  change  in  such 

office  shall  be  filed  in  the  offices  in  which  the  original  certificate 
of  incorporation  is  filed. 

Article  II 

MEETINGS 

Section  i.  Annual.  The  annual  meeting  of  the  Society  shall 
be  held  on  the  second  Saturday  in  the  month  of  March  at  8 
P.  M.,  at  such  place  as  the  board  of  directors  may  appoint,  or  if 
no  appointment  be  made,  at  the  registered  office  of  the  Society. 

Section  2.  Special.  A  special  meeting  of  the  Society  may  be 
called  by  the  board  of  directors,  or  on  the  written  petition  of 
ten  per  cent  in  number  of  the  stockholders.  One  week's  notice 
shall  be  given  in  either  case,  and  every  call  shall  clearly  set 
forth  the  object  of  the  special  meeting,  and  no  business  other 
than  that  set  forth  in  the  call  shall  be  transacted  at  such  special 
meeting. 

Section  3.  Right  to  vote.  Every  stockholder  not  in  arrears 
upon  the  payment  of  dues  or  othenvise  indebted  to  the  Society 
shall  be  entitled  to  one  vote  irrespective  of  the  number  of  shares 
held  by  him.    No  proxies  shall  be  allowed  in  voting. 

Section  4.  Quorum.  Ten  per  cent  in  number  of  the  stock- 
holders, but  in  no  case  less  than  five  persons,  shall  constitute  a 
quorum. 

Section  5.  Directors'  meetings.  The  Board  of  Directors  shall 
hold  regular  monthly  meetings  at  such  times  as  they  may  by 
resolution  appoint,  and  may  hold  special  meetings  upon  a  call 
of  the  president  or  any  two  directors  of  which  two  days'  notice 
shall  be  given.  A  majority  of  the  directors  shall  constitute  a 
quorum. 

Article  III 

Section  i.  The  corporate  powers  of  this  Society  shall  be 
vested  in  a  board  of  nine  (9)  directors,  except  such  powers  as 
are  or  may  be  reserved  by  statute,  by  the  certificate  of  incor- 


3IO  APPENDIX  n 

poration,  or  by  these  by-laws  to  be  exercised  by  the  Society  aa 
a  whole. 

Section  2.  The  directors  shall  be  chosen  by  the  stockholders 
at  the  annual  meeting.  Upon  demand  of  one-tenth  of  the  stock- 
holders present  the  election  shall  be  held  by  cumulative  voting. 

Section  3.  Officers.  The  Board  of  Directors  shall  elect  from 
their  own  number  a  president,  a  vice-president  and  a  treasurer, 
and  shall  also  appoint  from  their  own  number  or  from  the  general 
membership  a  secretary  and  shall  have  power  to  fill  vacancies  in 
the  Board  of  Directors  to  serve  until  the  next  annual  meeting, 
and  may  without  restriction  appoint  such  other  ofiicers,  agents 
or  factors  as  they  may  see  fit,  and  shall  fix  the  powers  and  duties 
of  all  oflEicers,  agents  and  factors  except  as  otherwise  provided 
in  these  by-laws. 

Section  4.  Duties  of  officers,  the  President.  The  President 
shall  preside  at  the  meetings  of  the  company  and  at  the  meetings 
of  the  Board  of  Directors;  he  shall  sign  all  notes,  contracts, 
conveyances  and  agreements  that  the  Board  of  Directors  may 
by  resolution  require  him  to  sign  and  also  a  correct  copy  of  the 
minutes  of  the  proceedings  of  the  meetings  of  the  company  and 
of  the  Board  of  Directors.  He  shall  represent  this  corporation 
at  the  meetings  of  any  corporation  in  which  it  may  hold  stock, 
and  cast  the  votes  therein  to  which  this  company  may  be  en- 
titled. He  shall  have  custody  of  the  bonds  of  all  officers  and 
employes  under  bond. 

Vice-President.  In  the  absence  or  inability  of  the  President, 
the  Vice-President  shall  preside  and  perform  the  duties  of  the 
President. 

Secretary.  The  Secretary  shall  keep  a  full  record  of  all  the 
proceedings  of  the  shareholders,  and  of  the  Board  of  Directors, 
in  proper  books.  He  shall  countersign  all  notes,  contracts, 
conveyances,  and  agreements,  and,  generally,  shall  perform  all 
duties  the  Board  of  Directors  may  require. 

The  Secretary  shall  prepare  an  alphabetical  list  of  all  stock- 
holders to  go  on  the  nominating  ballot  to  be  voted  by  mail, 
and  shall  call  the  Board  of  Directors  together  in  due  season  to 
prepare  a  report  on  nominations  to  be  presented  to  the  annual 
election  and  meeting  of  the  company,  at  which  time  the  stock- 


APPENDIX   II  311 

holders  shall  elect  their  officers  from  nominations  so  made,  at 
least  one  day  before  the  annual  meeting  is  to  be  held,  showing 
the  names  of  the  ten  stockholders  who  have  received  the  most 
nominating  votes. 

He  shall  make  a  report  of  the  attendance  of  the  members 
of  the  Board,  showing  how  many  meetings  held  and  how  many 
each  member  attended,  and  cause  the  same  to  be  posted  in  the 
store  during  the  month  of  January  of  each  year. 

He  shall  also  make  a  report  to  the  annual  stockholders'  meet- 
ing showing  the  total  expense  involved  in  the  holding  of  the 
meetings  of  the  Board  of  Directors. 

Treasurer.  The  treasurer  shall  have  the  custody  of  the  funds 
and  investments  of  the  Society  other  than  such  moneys  and 
property  as  may,  by  the  Board  of  Directors,  be  entrusted  to 
other  officers  and  employes.  He  shall  cause  the  moneys  in 
his  custody  to  be  deposited  in  the  name  of  the  Society  in  such 
banking  institutions  as  the  Board  of  Directors  may  order. 
He  shall  present  monthly  financial  reports  to  the  Board  of 
Directors  and  annual  reports  to  the  stockholders'  meeting  and 
shall  have  such  other  duties  and  powers  as  may  be  ordered  by 
the  Board  of  Directors. 

Section  5.  Notices.  Notices  of  all  meetings  and  matters  may 
be  sent  by  mail  to  the  last  post  office  address  registered  with 
the  Society  by  the  shareholder. 

Article  IV 

LIMITATION   OF   PROPERTY 

Section  i.  The  real  and  personal  estate  of  the  Society  shall 
not  exceed  one  hundred  and  fifty  thousand  ($150,000)  dollars. 

Article  V 

TRANSFER  OF   SHARES 

Section  i.  No  person  shall  be  admitted  as  shareholder  of  the 
Society,  nor  shall  any  shares  be  transferred  to  him  until  his 
name  has  been  proposed  and  seconded  by  existing  members 
and  accepted  by  a  vote  of  the  Board  of  Directors.    Any  share 


312  APPENDIX   n 

may  be  transferred  to  an  existing  member,  or  to  a  person  so 
accepted.  All  transfers  of  shares  must  be  made  on  the  books 
of  the  Society  by  surrendering  the  old  certificate  and  issuing 
new  certificates  in  the  name  of  the  purchaser,  who  by  acceptance 
thereof  agrees  to  all  by-laws  and  rules  of  the  Society,  including 
also  all  amendments  theretofore  or  thereafter  adopted,  and 
thereby  becomes  a  member  of  the  Society.  No  shares  can  be 
transferred  until  all  claims  of  this  Society  against  the  owner  of 
such  shares  shall  have  been  paid. 

Section  2.  If  any  shareholder  desires  to  dispose  of  any  share 
he  shall  first  offer  to  sell  the  same  to  the  Society.  If  the  Society 
declines  to  purchase  he  may  find  a  purchaser  acceptable  to  the 
Society  as  above  provided.  The  Board  of  Directors  is  authorized 
to  purchase  any  share  or  shares  out  of  the  surplus  of  the  Society. 

The  issue  and  transfer  of  all  shares  shall  be  registered  on  the 
books  of  the  Society. 

Article  VI 

WITHDRAWALS 

Section  i.  Members  may  withdraw  from  the  Society  by  sell- 
ing and  transferring  their  shares  as  herein  provided. 

Article  VII 

INVESTMENTS 

Section  i.  The  Board  of  Directors  may  invest  not  exceeding 
thirty  per  cent  of  the  capital  in  or  on  security  of  other  societies 
or  corporations  through  which  its  products  are  disposed  of,  or 
its  supplies  secured,  provided  that  not  more  than  ten  per  cent 
thereof  be  invested  in  any  one  such  society  or  corporation. 

Article  VIII 

Section  i.  No  credit  shall  be  given  in  any  sale  of  the  Society's 
goods  at  retail  but  every  such  transaction  shall  be  for  cash. 

In  purchasing  goods  the  Society  may,  subject  to  rules  to  be 
made  by  the  Board  of  Directors,  take  such  time  of  payment 
not  exceeding  thirty  (30)  days  as  may  be  usual  in  the  trade. 


i 


Appendix  n  313 

Credit  shall  not  be  given  or  taken  in  any  other  business 
transaction  without  special  vote  of  the  Board  of  Directors. 

The  Society  may  borrow  money  and  give  its  note  therefor 
whenever  authorized  by  the  special  vote  of  a  majority  of  the 
whole  Board  of  Directors.  The  Society  may  by  special  vote  of 
the  Board  of  Directors  mortgage  any  real  estate  which  it  may 
own,  and  may  give  its  note  or  bond  in  connection  with  any  such 
mortgage. 

Article  IX 

BONDS  OF  OFFICERS  AND  AGENTS 

Section  i.  The  treasurer  and  other  fiduciary  officers  and 
agents  shall  each  give  a  bond  with  corporate  surety,  to  be  paid 
for  by  the  Society,  for  the  faithful  performance  of  their  re- 
spective duties,  and  to  account  for,  and  return  all  moneys  and 
property  of  the  Society  which  may  come  into  their  hands.  The 
amount  of  such  bonds  shall  be  fixed  in  each  case  from  time  to 
time  by  the  Board  of  Directors. 

Article  X 

AUDIT 

Section  i.  The  accounts  shall  be  audited  at  least  annually, 
and  as  much  oftener  as  the  Board  of  Directors  may  from  time 
to  time  order,  by  or  under  the  direction  of  an  auditing  com- 
mittee of  three  shareholders  to  be  elected  by  the  shareholders 
at  the  annual  meeting. 

Article  XI 

DISTRIBUTION   OF   PROFITS 

Section  i.  At  the  end  of  each  calendar  year  the  net  profits 
of  such  year  shall  be  applied  and  distributed  as  follows: 

I.  A  sum  equal  to  five  (5%)  per  centum  of  the  net  profits 
shall  be  annually  appropriated  for  a  contingent  or  sinking  fund, 
and  such  appropriation  shall  continue  to  be  annually  made 
until  there  shall  be  accumulated  a  sum  equal  to  thirty  (30%)  per 


314  APPENDIX  n 

centiim  of  the  capital  stock  of  the  Society,  and  as  much  longer 
as  the  Board  of  Directors  shall  see  fit. 

Section  2.  A  dividend  at  the  rate  of  six  (6%)  per  cent  per 
annum  shall  then  next  be  paid  upon  all  shares  of  stock  which 
have  been  outstanding  and  fully  paid  during  the  whole  of  the 
calendar  year  except  that  for  the  year  191 2  dividends  may  be 
computed  on  shares  fully  paid  May  ist,  19 12,  and  one-half  such 
amount  upon  shares  which  have  been  outstanding  and  paid 
during  the  last  half  of  the  calendar  year.  Such  dividends  shall 
be  cumulative,  but  may  be  deferred  in  the  judgment  of  the 
Board  of  Directors. 

Section  3.  After  the  foregoing  provisions  have  been  made 
for  such  contingent  or  sinking  fund,  for  such  cumulative  divi- 
dends, the  Board  of  Directors  shall  declare  out  of  the  remaining 
profits  a  dividend  to  the  shareholders  not  in  arrears  upon  the 
instalments  on  their  shares  in  proportion  to  the  purchases  made 
by  such  shareholders  during  the  past  year.  The  Directors  may 
at  the  same  time  declare  a  dividend  at  not  exceeding  one-half 
the  rate  paid  upon  the  purchases  of  the  members  of  the  Society, 
to  non-members  of  the  Society,  in  proportion  to  the  amount  of 
their  respective  purchases.  The  Board  of  Directors  may  in 
either  case  limit  the  participation  in  such  dividends  to  any 
class  or  classes  of  purchases,  and  may  provide  that  other  classes 
of  purchases  shall  be  non-participating.  The  Board  may  make 
such  classifications  not  only  according  to  the  kind  of  goods 
purchased,  on  the  basis  and  manner  of  payment  therefor,  but 
also  according  to  such  rules  as  they  may  establish  for  keeping 
sales  records  and  for  the  presentation  of  vouchers  and  evidences 
of  right  to  participate. 

Section  4.  The  rate  of  dividend  to  shareholders  shall  be  a 
whole  number  per  cent  to  be  ascertained  by  dividing  the  net 
profits  not  appropriated  to  the  contingent  or  sinking  fund,  or 
to  dividends  on  capital,  as  above  provided,  by  the  amount  of 
participating  purchases  of  shareholders,  plus  one-half  the 
amount  of  participating  purchases,  if  any,  of  non-shareholders, 
and  disregarding  the  fractional  remainder,  which  fractional 
remainder,  if  any,  shall  be  added  to  the  surplus  of  the  Society. 

Section  5.  All  moneys  credited,  whether  by  way  of  dividends 


APPENDIX   n  315 

or  otherwise,  to  any  shareholder  who  shall  be  in  arrears  to  the 
Society  upon  payment  of  instalments  on  shares  or  otherwise, 
shall  be  applied  to  such  arrearages  until  the  same  be  fully  paid. 

Article  XII 

SEAL 

Section  i.  The  seal  of  the  Society  shall  contain  the  name  of 
the  Society  between  two  concentric  circles,  and  in  the  center 
shall  be  "New  Jersey — 191 2"  and  such  seal  is  hereby  adopted 
as  the  seal  of  the  Society.  Such  seal  shall  be  kept  by  the  Secre- 
tary and  shall  be  affixed  to  certificates  of  stock,  but  not  to  any 
instrument  except  by  special  order  of  the  Board  of  Directors. 


i 


INDEX 


Administrative  training  given  by 
co-operation,  133 

Adulteration  of  food,  extent  of,  24- 
25;  deterrent  but  limited  effect 
of  federal  law  upon,  25-26;  im- 
possibility of  law  reaching  subtler 
forms  of,  26-28;  remedy  for,  not 
found  in  competition,  32;  reme- 
died by  co-operative  system,  81- 
82 

Advertising,  the  psychology  of,  7-9; 
program  setting  forth  purpose  of, 
q;  personal  salesmanship  the  com- 
plement of,  q;  annual  expenditure 
for,  in  United  States,  12-13; 
nuisance  of  bill  board,  14;  lack  of 
wisdom  in  choice  in  buying  as 
result  of,  15-17;  people's  habits 
changed  by,  18-19;  amount  paid 
for  annually  by  the  consumer, 
23;  as  a  means  of  standardizing 
qualities  and  grades,  51-52; 
amounts  spent  for,  by  makers  of 
standard  articles,  52;  cost  to  con- 
sumer not  necessarily  increased 
by,  S3;  consumer  has  ultimately 
to  bear  cost  of,  53-54,  199  n.;  the 
true  function  of,  iio-iii;  spirit 
of  co-operative,  in;  reason  for 
low  cost  of  co-operative,  in;  of 
co-operative  stores,  147-148;  value 
of  large,  but  inetliciency  of 
methods  of,  203  n.;  principles  to 
be  observed  in  co-operative,  202- 
206;  by  circulars,  window-dress- 
ing, and  signs,  206-207;  suf>- 
plemented    by    store    salesmao- 


ship,  207-208;  salesmanship  and, 
should  overlap  as  little  as  possible, 
208 

Agricultural  co-operation,  in  Den- 
mark and  Ireland,  227-228,  241- 
242;  in  Holland,  243;  elements  of 
both  productive  and  distributive 
co-operation  in,  243;  greatness 
of  opportunity  open  to,  254-255 

Alger,  George  W.,  Atlantic  article 
by,  quoted,  19  n. 

"All  Package"  Grocery  Company, 
bulk  goods  weighed  and  packaged 
at  low  cost  by,  54  n. 

Allyn,  Lewis  B.,  cited  on  extent  of 
impure  food  evil,  24 

America,  the  prospect  for  co-opera- 
tion of  consumers  in,  264-271; 
plans  for  a  strong  consumers' 
movement  in,  272-281 

American  Bankers'  Association, 
quoted  concerning  charge  ac- 
counts, 67  n. 

American  Rochdale  League,  activi- 
ties of,  in  Northwestern  states, 
294-296 

American  Sugar  Refinery  Company, 
expenditures  of,  for  advertising, 
52  n. 

Ames,  Ernest  0.  F.,  account  by,  of 
consumers'  co-operation  in  Cali- 
fornia, 286-292 

Angelescu,  Dr.  J.  N.,  cited  on  co- 
operative movement  in  Rou- 
mania,  248  n. 

Anseele,  Edouarde,  successful  co- 
operative movement  started  in 
Belgium  by,  239 

Antagonism,  relation  of,  produced 


3i8 


INDEX 


by   present   competitive   system, 

69-73 

Argentina,  co-operation  in,  253 

Arrangement  of  goods  in  co-opera- 
tive store,  185 

Asia,  progress  of  co-operation  in 
countries  of,  251-253 

Atkinson,  Edward,  quoted,  47  n., 
203 

Australia,  progress  of  co-operation 
in,  254 

Austria,  co-operation  in,  245-246 

Automobiles,  unwise  expenditures 
for,  due  to  advertising,  19 

B 

Bad  debts  of  stores,  statistics  of,  1 14 
Balkan  States,  co-operation  in,  247- 

248 
Banks,   co-operative,  in  Germany, 

231-233; in  Canada,  285 
Barnard,  H.  E.,  quoted  concerning 

pure  food,  28-30 
Barnes,   Earl,  quoted  on  need  of 

social  inventions,  143 
Baxter,  Sylvester,  "The  Nuisance 

of  Advertising"  by,  quoted,  14  n. 
Beakmore,   Frank   W.,   quoted   on 

remedies  for  high  cost  of  living. 

Son. 
Belgium,  extent  of  co-operation  in, 

as  a  mutual  aid  movement,  123- 

124;  account  of  co-operation  in, 

239-240;  co-operation  in,  during 

the  great  war,  240 
Bill  board  advertising,  nuisance  of, 

14 

Bonus  system  in  co-operative  stores, 
156 

Books,  for  co-operative  store  work- 
ers, 158,  160;  on  store  manage- 
ment, 189;  on  the  co-operative 
movement,  215  n.;  on  co-opera- 
tion of  producers,  262-263 

Borge,  W.  S.,  True  Food  Values  and 
Their  Low  Cost  by,  cited,  22  n. 


Brandeis,  Judge,  quoted  on  cut- 
prices  in  stores,  99;  on  real  suc- 
cess in  business  viewed  as  a  pro- 
fession, 154;  on  the  inconsistency 
'  I  present  profit  system  and  real 
democracy,  264-265 

Branding  of  articles  and  commodi- 
ties, as  a  means  of  standardizing 
qualities  and  grades,  51-52 

Brooks,  John  Graham,  quoted  on 
co-operation  as  a  political  train- 
ing school,  133  n.;  on  the  possi- 
bility of  successful  co-operation 
in  America,  268 

Bru6re,  Martha  B.,  "Educating 
the  Consumer"  by,  quoted,  20  n. 

Bubnoff,  J.  v.,  The  Co-operative 
Movement  in  Russia,  cited,  235  n., 
236  n. 

Bulk,  question  of  buying  goods  in, 
rather  than  packaged,  197-201 

Business  training  given  by  co-opera- 
tive societies  in,  252-253 

Business  training  given  by  co-opera- 
tion, 133 

Buying,  advantages  of  co-operative, 
85-86 

Buying  clubs,  167,  169-175;  essen- 
tials for  success  of,  1 70-1 71 ;  litera- 
ture on,  171-172;  low  possible 
expense  of,  172;  desirability  of 
getting  on  to  a  Rochdale  basis, 
173;  cash  trading  advisable  in, 
173-174;  special  discounts  to, 
174;  educational  benefit  of,  175 

Buying  for  co-operative  stores,  186- 
188 

By-laws  of  co-operative  society, 
sample,  308-315 

By-products  of  co-operative  system. 


Cabot,  Richard  C,  What  Men  Live 

By,  quoted,  156 
Cairns,  John,  quoted,  154-155 


INDEX 


319 


California,  account  by  E.  O.  F. 
Ames  of  consumers'  co-operation 
in,  286-292 

California  Fruit  Growers'  Exchange, 
example  of  co-operative  produc- 
tion, 257 

Canada,  status  and  outlook  of  co- 
operative buying  in,  283-286 

Capital,  arrangement  of,  in  starting 
a  co-operative  society,  178 

Cash  trading,  under  Rochdale  plan, 
91-92;  in  buying  clubs,  173-174 

Certificate  of  incorporation,  sample, 
306-308 

Chain  stores,  advantages  and  draw- 
backs of,  62-63;  little  of  promise 
and  much  of  menace  in,  63 ;  fooling 
of  customers  by  cut-rate  prices  in, 
99;  large  net  profits  of,  loo-ior 

Chalmers,  Hugh,  on  cause  of  waste 
in  advertising,  inn. 

Charge  accounts,  evils  of,  67n.; 
three  classes  of  consumers  who 
have,  113-114;  bad  debts  result- 
ing from,  114;  co-operative  prin- 
ciples opposed  to,  114-116 

Charter  and  by-laws  of  co-operative 
society,  179,  308-315 

Choice,  wisdom  of,  facilitated  by 
co-operation,  8r;  hindered  by  ag- 
gressive selling  system,  106 

Christian  Socialists,  the,  220-221 

Circulars,  use  of,  in  co-operative 
store  advertising,  205,  206 

Citizenship,  how  co-operation  helps 
in  training  for,  131-133 

Cleanliness  in  stores,  209-210 

Cold  storage  warehouses,  advan- 
tages and  disadvantages  of,  51 

Colter,  John  R.,  "The  Buying  Club 
Movement,"  cited,  169  n. 

Common  sense  necess;iry  to  success 
in  co-operation,  147 

Competition,  failure  of,  to  secure 
unwastcful  methods  of  distribu- 
tion, 50;  waste  of  system  of,  due 


to  duplication  of  manufacturing 
and  selling  processes,  55;  centraliz- 
ation of  wealth  due  to,  65-67; 
discouragement  of  thrift  by,  67- 
69;  antagonism  between  dealers 
and  between  dealers  and  cus- 
tomers resulting  from,  69-70;  ef- 
fects on  shoppers,  dealers,  and 
clerks,  70-71;  combination  of 
dealers  not  a  remedy  for,  71-72; 
confessed  failure  of  system  of,  78; 
waste  of,  in  retailing,  95-96;  how 
evils  of,  are  cured  by  co-operation, 
99-100 

Concentration  of  wealth  in  few 
hands,  an  evil  of  competiti\e 
system,  65-67;  remedy  for,  found 
in  co-operation,  135-137 

Consumer,  system  of  co-operation 
built  upon  the,  rather  than  upon 
the  producer,  135-137;  how  ulti- 
mate success  of  co-operation  de- 
pends upon,  144-145 

Consumer  societies,  should  meet 
producers'  societies  halfway,  259- 
260;  steps  to  be  taken  toward  es- 
tablishment of,  274-275 

Co-operative  credit,  in  Germany, 
231;  in  Canada,  285 

Co-operative  distribution,  strength 
of,  249-251 

Co-operative  League  of  America, 
literature  issued  by,  171-172,  179; 
effort  being  made  by,  to  form 
chain  of  co-oi)crative  clubs,  173; 
pamphlet  "Starting  Right"  is- 
sued by,  177  n.;  a  clearing  house 
of  information  and  literature,  275 

Co-operative  News,  weekly  periodical, 
215  n. 

Co-operative  production,  257-263 

Co-operative  society,  planning  a, 
176-182 

Co-operative  store,  starting  and 
running  a,  183-189. 

Co-oi)erative    stores,    education    of 


320 


INDEX 


consumers  necessary  to  success 
of,  143-152;  enlisting  and  develop- 
ing workers  in,  153-161 ;  managers 
of,  161-162;  questions  as  to  when 
and  where  to  start,  163-168;  the 
delivery  problem,  190-196;  hand- 
ling of  trade-marked-goods  by, 
197-201 

Co-operative  system,  the  only  rem- 
edy for  evils  of  present  method  of 
distribution,  79;  successful  work- 
ing of,  where  tried,  79-80;  brief 
outline  of  plan,  80;  wiser  selection 
facilitated  by,  81;  how  impure 
food  and  short  weight  evils  are 
overcome  by,  81-82;  costs  to  con- 
sumer reduced  under,  82-87;  out- 
line of  Rochdale  plan,  88-94;  how 
evils  of  competition  are  cured  by, 
99-roo;  reasons  for  faith  in  ulti- 
mate success  of,  100-102;  intangi- 
ble benefits  possible  through,  102- 
104;  salesmanship  under  the,  105- 
110;  reasons  for  opposition  of,  to 
giving  credit,  114-116;  plan  of 
deposit  accounts  in  use  under, 
116;  history  of  the  movement, 
215-256;  prospect  for,  in  America, 
264-271 

Co-operative  Union,  work  of  the, 
226-227 

Co-operative  Wholesale  Society  of 
Manchester,  England,  92;  history 
of  the,  221-224 

Cost  of  living,  figures  of,  for  average 
family,  39  n. 

Costs,  reduction  of,  by  co-operation, 
82-87 

Crane,  Caroline  Bartlett,  cited  on 
federal  inspection  of  meat,  25 

Crane,  Dr.  Frank,  on  democracy  and 
co-operation,  139  n. 

Credit  customers.  See  Charge  ac- 
counts. 

Crissey,  Forrest,  quoted  on  the 
crooked  farmer,  260  n. 


Crosthwaite,  H.  S.,  cited,  248 
Cyprus,  co-operation  in,  248 

D 

Danson,  Wealth  of  Households  by, 
quoted,  83-84 

Debasement  of  goods.  See  Adultera- 
tion 

Delivery  problem,  the,  190-196 

Delivery  vehicles,  195 

Democracy,  co-operation  a  school 
of,  131-132;  co-operation  the  next 
step  in  world  sweep  of,  138-139 

Dermiark,  agricultural  co-operation 
in,  241-242 

Department  stores,  large  net  profits 
of,  loo-ioi 

Deposit  account  system  at  co-opera- 
tive stores,  116 

Desjardins,  Alphonse,  co-operative 
banks  organized  in  Canada  by, 

285 

Devine,  E.  T.,  quoted  on  use  of 
wealth,  69 

Dillon,  John  J.,  quoted  concerning 
adulteration  of  food,  26  n. 

Directors,  number  and  choice  of,  of 
co-operative  society,  179-180;  re- 
lation of,  to  store  management, 
181-182 

Discounts  to  buying  clubs,  174 

Discouragement  of  thrift  a  result  of 
competitive  system,  67-69 

Dishonesty  in  dealers  encouraged  by 
competitive  system,  70-71 

Distribution  of  commodities,  the 
problem  of,  38-39;  importance  of 
problem,  39;  proportion  of  retail 
price  which  goes  for,  40;  figures  of 
high  cost  of,  40-41;  possibilities 
of  savings  in,  41-42;  expense  of, 
of  groceries,  42-44;  general  sources 
of  waste  in,  46-56;  summary  of 
evils  resulting  from  present  sys- 
tem of,  65-73;  failure  of  system 
of,  due  to  competition  for  profit, 


INDEX 


321 


77-79;  only  remedy  found  in 
consumer-owned  system,  79-80; 
economy  of,  through  large  plants, 
96-97;  social  and  ethical  gains 
under  co-operative  system  of, 
120-140;  world  strengtli  of  co- 
operative, 249-250 

Dividend,  rate  of,  in  co-operative 
societies,  178 

Dividends,  significance  of  payment 
of,  i8o-i8i;  half-rate  purchase,  to 
non-members,  181;  the  keynote 
of  the  Rochdale  idea,  217 

"Don'ts  for  Shoppers,"  Commis- 
sioner Hartigan's,  35-36 

Drugs,  amount  annually  spent  for, 
in  United  States,  19 

Duplication  of  stores,  waste  in,  58- 
59,  96-97 

E 

Economy,  of  distribution  through 
large  plants,  96-97;  co-operative 
buying  viewed  as  organized,  121 

Edison,  Thomas  A.,  quoted  on  in- 
efEciency  of  machinery  of  distri- 
bution, 45 

Education,  aim  of,  to  help  man 
choose  wisely,  4;  contributions  of 
Rochdale  pioneers  to,  123;  neces- 
sary to  successful  co-operation, 
144-146;  of  co-operative  store 
workers,  157-161 

Eggs,  result  of  housewives'  boycott 
of,  in  Chicago,  51 

Ely,  Richard  T.,  quoted  on  evils  of 
competition,  96 

Employees  in  stores,  influence  of  co- 
operation upon,  103-104;  benefi- 
cent effect  of  co-operation  on,  1 26- 
127;  enlisting  and  developing  of 
employees  for  co-operative  stores, 
153-162 

England,  training  of  store  workers 
in,  159;  extent  of  co-operation  in, 
236.   See  Rochdale  plan. 


Epitaph  of  a  "practical"  man  of 

business,  70 
Equality  of  sexes  under  co-operative 

system,  133 
Ethical    influence    of    co-operative 

trading,  120-140 
Europe,  war  in,  and  its  relations  to 

co-operation,  134,   238-239,   246; 

account  of  co-operation  in,  215- 

256 
Evans,     Richardson,    "Advertising 

as  a  Trespass    on    the    Public" 

by,  quoted,  15  n. 


Farmers'  fire  insurance,  an  instance 
of  successful  co-operation,  267- 
268 

Farmers'  retail  markets,  failure  of, 
to  prevent  waste  in  distribution, 
46 

Fay,  C.  R.,  Co-operation  at  Home 
and  Abroad  by,  cited  and  quoted, 
122  n.,  215  n.,  231  n.,  232  n.,  234, 
239  n.;  study  of  field  of  co-opera- 
tion by,  254-235 

Filene,  Edward  A.,  quoted  on  ad- 
vertising, 203  n. 

Finland,  co-operation  in,  246-247 

Finley,  Father  T.  A.,  helps  in  start- 
ing campaign  for  co-operation  in 
Ireland,  225 

Fish,  directions  for  detecting  bad, 
30  n. 

Five-and-ten-cent  stores,  profits  of, 
62.    See  Chain  stores 

Food,  sale  of  impure,  24-25;  limited 
effect  of  federal  law  regarding 
adulteration  and  misbranding  of, 
25-26;  sale  of  diseased  poultry  as, 
26  n.;  value  of  local  regulations 
concerning,  28;  thorough  inspec- 
tion hopeless,  28;  measures  to  be 
taken  by  housewives  in  securing 
pure,  28-30;  a  market  inspector's 


322 


INDEX 


instructions  as  to,  30-31;  short 
weights  in  sale  of,  33-37 

Food  budget  prices,  publication  of, 
98 

Food  products,  influence  of  adver- 
tising on  sale  of,  20 

Food-values,  list  of,  202  n. 

Ford,  James,  cited  on  extent  of  co- 
operation, 251 

France,  co-operative  production  and 
agriculture  in,  237;  co-operative 
stores  in,  237-238;  effect  of  the 
great  war  on  co-operation  in,  238- 

239 
Free  delivery  vs.  charge  for  delivery, 

191-193 
Fruits,  diagram  showing  main  chan- 
nels of  distribution  for,  48 


Germans,  attitude  of,  in  world  war, 
toward  French  co-operators,  134 

Germany,  co-operative  distribution 
in,  229-231;  co-operative  credit 
and  the  Kaiffcisen  banks  in,  231- 
232;  the  Schulze-Delitzsch  banks, 
233;  extent  of  co-operation  in,  234 

Gide,  Charles,  on  co-operation  in 
Germany,  229,  230;  quoted  on  co- 
operation in  France,  237-238; 
statistical  summary  of  co-opera- 
tive movement  in  Europe  given 
by,  249-251 

Gladstone,  W.  E.,  quoted  on  co- 
operative movement,  92 

Glasgow,  Scotch  Co-operative 
Wholesale  Society  of,  92 

Grading,  lack  of  proper,  a  main 
source  of  expense  in  process  of 
distribution,  49 

Granges,  buying  clubs  connected 
with,  169,  170 

Great  Britain,  extent  of  co-operation 
in,  226 

Greece,  co-operation  in,  248 


Grey,  Earl,  quoted  on  co-operation, 

138  n. 
Groceries,  profits  of  retailers  of,  42- 

44 
Grocers'  Magazine,  quoted  on  cost 

of  selling  as  compared  with  cost  of 

production,  40  n. 
Grocery  stores,  wasteful  duplication 

of,  58-59;  profits  of  chain,  62 

H 

Handling  of  goods,  convenience  of, 
in  co-operative  store,  185 

Hartigan,  Joseph,  "  Don'ts  for  Shop- 
pers" issued  by,  35-36 

Harvard  Graduate  School  of  Busi- 
ness Administration,  statistics 
from,  42-44 

High  cost  of  living,  remedies  for, 
80-8  r 

Holland,  co-operation  in,  243 

Hollingsworth,  H.  L.,  Adverlising 
and  Selling  by,  cited,  8  n. 

Holyoake,  G.  J.,  an  epitaph  by,  70; 
quoted  on  benefits  of  co-opera- 
tion, 138  n.;  bonus  system  ap- 
proved by,  156;  History  of  Co- 
operation by,  215  n. 

Homes,  statistics  of  rented  and 
mortgaged,  68 

Hoover,  Herbert,  statement  by, 
quoted,  259 

Hotchkin,  W.  R.,  quoted  on  adver- 
tising, 17-18 

Housewives,  part  of,  in  securing 
pure  food,  28-30 

Hungary,  co-operation  in,  246 


Ice,  waste  in  method  of  distribution 

of,  59 

Illinois  miners,  co-operative  enter- 
prises among,  293-294 

India,  start  made  in  co-operation  in, 
252 


INDEX 


323 


Installment  plan,  costliness  of,  64  n. 
Institute   of    Certified    Grocers    in 

England,  isq 
Insurance    companies,    example   of 

successful  co-operation  found  in, 

267-268 
Intangible  benefits  possible  through 

co-operation,  102-104 
International  Co-operative  Alliance, 

the,  251 
International  force,  co-operation  as 

a  great,  133-134 
Ireland,    co-operative    societies    in, 

225-226;   character  of  co-opera- 
tion in,  227-228 
Italy,  co-operative  labor  societies  in, 

244-245 

J 
Japan,  favorable  attitude  of,  toward 

co-operation,  253 
Jobbers,      possibility      of      saving 

through  elimination  of,  56-57 


Keen,  George,  report  bj',  on  pros- 
pects of  co-operation  in  Canada, 
283-286 

King,  Clyde  L.,  cited  on  milk  dis- 
tribution, 61  n. 


Labor  conditions,  improvement  in, 
under  co-operation,  132 

Labor  societies,  co-operative,  in 
Italy,  244-245 

Labor  unionism,  where  co-operation 
improves  upon,  135 

Ladd,  F.  E.,  quoted  on  cost  of  dis- 
tribution, 40  n. 

Laskcr,  Bruno,  article  on  "Im- 
perishable Belgium,"  cited,  240 

Law,  a  sample  co-operative,  301-306 

"Leaders,"  use  of,  by  storekeepers, 
9q;  avoidance  of,  by  co-operative 
stores,  205-206 


Legal  details  of  organizing  a  co- 
operative society,  179 

License  system  for  eliminating  su- 
perfluous stores,  97-98 

Life  Extension  Institute,  cited  on 
amount  spent  annually  for  drugs, 
19  n.;  Rookie  Squad  Diet  Experi- 
ment conducted  by,  22  n. 

Ligbtfoot,  Bishop,  on  benefits  of  co- 
operation, 138  n. 

Literature.  See  Books  and  Pam- 
phlets 

Location  of  co-operative  store,  184 

M 

McCann,    Alfred    W.,    quoted    on 

adulteration  and  misbranding  of 

food,  24 
Mail  order  houses,  profits  of,   62, 

loo-ior 
Man,  viewed  as  a  bundle  of  wants, 

3;   helped    to   choose   wisely    by 

education,  4 
Managers    of    co-operative    stores, 

duties  and  qualifications  of,  161- 

162;  care  in  selection  of,  176-177; 

employed  by  directors,  iSo 
Manchester,  England,  Co-operative 

Wholcsiilc  Society  of,  92 
Marketing   of   products,    co-opera- 
tive, 257-258 
Markets   and   Rural   Organization, 

Bureau  of,  pamphlets  issued  bj', 

172 
Marshall,  English  economist,  quoted 

on  co-operation,  93,  155 
Materialistic  influence,  elimination 

of,  by  co-operation,  125 
Maxwell,  John,  quoted  on  cost  of 

distribution,  40  n. 
Maxwell,    William,    on    encour.ige- 

ment  of   thrift  by   co-operation, 

121;   s;ilary  as  president   of   the 

Scottish  Wholesale,  225 
May,  H.  J.,  cited  on  co-operation  in 

Serbia,  248 


324 


INDEX 


Meat  dealers,  fights  between  co- 
operative organizations  and,  1 29- 
130 

Membership  in  co-operative  store, 
eligibility  of  candidates  for,  165; 
number  of  members,  177 

Middlebrough,  Co-operation:  A 
World-wide  Movement  by,  cited, 

131 

Middlemen,  expense  of,  in  distribu- 
tion of  commodities,  38-46;  the 
mere  number  of,  not  important, 
46;  less  important  to  reduce 
profits  of,  than  to  reduce  waste  in 
distribution,  63 

Milk,  waste  in  method  of  distri- 
bution of,  59-61 

Misbranding  of  food,  24 

Monopolies,  curb  placed  on,  by  co- 
operation, 128-131. 

Montclair,  N.  J.,  charge  for  delivery 
plan  in  co-operative  store  at,  192- 

193 
Montclair,    Co-operative     Society, 

266 
Mortgages,  statistics  concerning,  68. 
Mtlller,    Hans,     The     Co-operative 

Movement  abroad,  quoted,  230  n. 

N 

Nelson,  N.  0.,  co-operative  under- 
takings of,  in  New  Orleans,  292- 

293 

Netter,  Gaston  G.,  quoted  on  impure 
food  evil,  24-25 

New  Orleans,  consumers'  co-opera- 
tion in,  292-293 

North  Dakota,  co-operation  in,  294- 
29s,  296-297 

Northwestern  states,  progress  of  co- 
operation in,  294-299 

Norway,  co-operation  in,  243 

Nystrom,  Paul  H.,  quoted  on  sales- 
manship, 1 2  n. ;  Economics  of  Re- 
tailing by,  quoted  and  cited,  21, 


98;  on  the  present  state  of  the 
art  of  merchandizing,  274-275 

o 

O'Donnell,  T.,  on  co-operation  in 
Denmark,  242  n. 

Olathe,  Kansas,  successful  co-opera- 
tive association  at,  269 

Orderliness  in  stores,  209-210 

Osborne,  William  C.,  quoted  on  pos- 
sibilities of  saving  in  distribution 
of  food  supplies,  45-46 

Osborne  Commission,  report  of,  on 
markets,  prices,  and  costs,  quoted, 
36-37;  on  waste  in  methods  of  dis- 
tribution, 49  n.;  on  package  vs. 
bulk  goods,  S3 ;  on  waste  in  retail- 
ing methods,  57  n. 

Over-supply,  utilization  of  the, 
under  co-operative  system,  131 

Owen,  Robert,  "the  Father  of  Co- 
operation," 216 


Pacific  Co-operative  League,  estab- 
lishment and  career  of,  289-291 

Packaged  goods,  question  of  advan- 
tages of,  compared  with  bulk 
goods,  52-54;  extra  cost  of,  an 
advertising  and  sales-pushing  cost, 
54;  problem  of,  in  co-operative 
stores,  197-201 

Patent  medicines,  annual  expendi- 
tures for,  19 

Peabody,  Francis  G.,  on  conditions 
of  success  in  co-operation,  147, 154 

Perkins,  George  W.,  buying  in  bulk 
favored  by,  53,  198 

Perky,  C.  W.,  Co-operation  in  the 
United  States  by,  265  n. 

Perky,  Scott  H.,  secretary  of  Co- 
operative League  of  America,  173 

Pittsburgh,  co-operation  around,  293 

Planning  a  co-operative  society, 
176-182 


INDEX 


325 


Plunkett,  Sir  Horace,  campaign  for 
co-operation  started  in  Ireland  by, 
225 

Poland,  co-operation  in,  247 

Potter,  Beatrice  (Mrs.  Sidney 
Webb),  writings  of,  on  co-opera- 
tion, cited  and  quoted,  86  n., 
121  n.,  126  n.,  127  n.,  133,  139  n., 
215,  221,  255 

Poultry,  evils  connected  with  sale 
of  diseased,  26  n. 

Powell,  G.  Harold,  Co-operation  in 
AgriciiUure  by,  cited,  258 

Pratt,  E.  E.,  cited  on  improvement 
in  distribution,  47  n. 

Price,  Theodore  H.,  cited  on  cost  of 
distribution,  39  n. 

Pricing  of  goods  in  co-operative 
store,  188 

Proctor  and  Gamble  Company,  ex- 
penditures of ,  for  advertising,  52  n. 

Producers,  societies  of,  should  be 
met  halfway  by  consumer  socie- 
ties, 250-251;  co-operation  of, 
257-263 

Profit,  quest  for,  the  cause  of  evils 
of  competitive  system,  77-78 

Propaganda  necessary  to  success  in 
co-operation,  147-148 

Psychology,  principles  of,  applied 
in  modern  salesmanship,  7-15; 
to  be  learned  and  practiced  by 
salespersons,  211  n. 

Public  markets,  cost  of  distribution 
reduced  by,  61 


Quebec,   province  of,   co-operative 

banks  organized  in,  285 
Quickness  in  sales,  importance  of, 

209 

R 

Raiffeisen  banks  in  Germany,  231- 

232 
Redfern,   Percy,   Story  of  the   Co- 


operative Wholesale  Society,  cited 
and  quoted,  91  n.,  121  n.,  122  n., 
123,  131,  215  n. 

Renting  of  homes,  statistics  con- 
cerning, 68 

Responsibility  of  members  of  co- 
operative societies,  132-133 

Retailing,  waste  in  methods  of,  57- 
64 

Right  Relationship  League,  forma- 
tion of,  in  Minneapolis,  294 

Rochdale  plan,  history  and  outline 
of,  88-94;  similarity  of  organiza- 
tions in  continental  Europe  to, 
93;  adaptable  to  various  kinds  of 
enterprises,  93;  full  account  of, 
217-220 

Rochdale  Wholesale  Company  in 
California,  experience  of,  286-292 

Rochester,  N.  Y.,  milk-distribution 
system  in,  60-61 

Roosevelt,  Theodore,  quoted  con- 
cerning the  co-operative  plan,  144 

Rosebery,  Lord,  on  co-operation,  92 

Ross,  Sin  and  Society  by,  quoted, 
72  n. 

Roumania,  co-operation  in,  247-248 

Royal  Baking  Powder  Company,  ex- 
penditures of,  for  advertising, 
52  n. 

Russia,  co-operation  in,  234-236 


Salaries  of  co-operative  store  work- 
ers, 153-154, 155-157 

Salesmanship,  subtle  methods  of 
modern,  6-15;  work  of  advertising 
supplemented  by,  9;  program 
setting  forth  purpose  of,  9;  fine 
points  taught  by  course  in,  lo-ii; 
unwise  buying  caused  by,  15-18; 
unfair  advantages  on  side  of,  21- 
22;  under  a  co-operative  system, 
105-110,  207-211;  begins  where 
advertising  leaves  off,   207-208; 


326 


INDEX 


advertising  and,  should  overlap 
as  little  as  possible,  208 

Salesmen,  debasing  effect  of  com- 
petitive system  on,  70-71.  See 
Employees. 

Sanitary  conditions,  securing  of 
good,  under  co-operation,  132 

Schools,  training  for  store  work  in 
public,  159 

Schulze-Delitzsch  banks  in  Ger- 
many, 233 

Scotch  Co-operative  Wholesale  So- 
ciety of  Glasgow,  92;  money  lent 
to  city  of  Glasgow  by,  125;  fight 
waged  by,  against  soap-makers, 
128-129;  f^l^  account  of  the,  224- 
225 

Scott,  Walter  Dill,  Psychology  of 
Adverlisiiig,  quoted,  7-8 

Seager,  H.  R.,  quoted  on  economical 
consumption,  19  n.;  business  li- 
cense system  favored  by,  98 

Sears,  Roebuck  &  Co.,  profits  of, 
62  n.,  loi  n. 

Serbia,  co-operation  in,  248 

Severance,  I^uth,  article  "Be  Your 
Own  Grocer,"  cited,  169  n. 

Sheldon,  Arthur  Frederick,  The 
Science  of  Business  Building  by, 
quoted,  lo-ii 

Shipping  associations,  advantages 
of,  258-259 

Shoppers,  influence  of  competitive 
system  on,  70 

Short  weights  in  sale  of  food,  33-37; 
evil  of,  felt  most  by  the  poor,  36; 
report  of  Osborne  Commission 
quoted  concerning,  36-37;  reme- 
died by  co-operative  system,  81- 
82 

Siberia,  co-operation  in,  252 

Signs  on  stores,  advertising  by 
means  of,  206-267 

Single  tax,  improvement  of  co- 
operation upon  program  of  the, 
136 


Smith,  Dr.  A.  W.,  statement  of  food- 
values  by,  202  n. 

Smith,  Herbert  A.,  quoted  on  ill 
effects  of  advertising,  19  n.;  on 
success  under  system  of  competi- 
tion, 100  n.;  on  psychology  in 
salesmanship,  108  n. 

Soap-makers,  struggle  of  Scottish 
co-operators  with,  128-129 

Social  influence  of  co-operative  trad- 
ing, 120-140 

Socialism,  wherein  co-operation  im- 
proves upon, 136 

Social-mindedness,  growth  of,  as  a 
motive  in  business,  104 

Social  vision  given  by  co-operation, 

134-135 

Sonnichsen,  Albert,  Outlook  article 
by,  on  co-operation  in  Belgium, 
cited,  123;  Consumers'  Co-opera- 
tion by,  cited,  128  n.,  131 

South  Dakota,  co-operation  in,  294- 

295 

Spain,  co-operation  in,  245 

Staff  conferences  of  store  workers, 
160 

Standardization  of  qualities  and 
grades,  lack  of,  a  source  of  ex- 
pense in  distribution,  49,  51-52 

Store  cards  and  signs,  206-207 

Store  management,  literature  on,  189 

Stores,  wasteful  duplication  of,  58- 
59,  96-97;  methods  of  eliminating 
inefficient  and  needless,  97-98; 
influence  of  co-operation  on  em- 
ployees in,  103-104.  See  Co- 
operative stores. 

Straus,  S.  W.,  thrift  statistics  by, 
68  n. 

Suggestion,  part  played  by,  in  ad- 
vertising, 7 

Sweden,  war  waged  against  trusts 
by  co-operators  in,  130-131;  his- 
tory of  co-operation  in,  242-243 

Switzerland,  struggle  between  meat- 
dealers  and  co-operators  in,  129- 


INDEX 


327 


130;  account  of  co-operation  in, 
240-241 

Sydney  Mines,  N.  S.,  work  of  Brit- 
ish Canadian  Co-operative  So- 
city  at,  285-286 

Syndicalism,  program  of,  contrasted 
witii  that  of  co-operation,  136 


Tamarack  Co-operative  Association 
of  Calumet,  Michigan,  269 

Taussig,  F.  W.,  quoted  on  inef- 
ficiency of  ordinary  retail  trad- 
in,  45;  on  relation  of  retail  trader 
to  working  classes,  59  n. 

Telephones  in  co-operative  stores, 
190-191 

Thackara,  A.  M.,  quoted  on  co- 
operation in  Germany,  234 

Thinking  co-operatively,  necessity 
for,  149 

Thrift,  dis"couragement  of,  by  com- 
petitive system,  67-69;  statistics 
showing  lack  of,  68;  co-operation 
as  an  aid  to,  121 

Tobacco  Trust,  expenditures  of,  for 
advertising,  52  n. 

Tope,  J.  LeRoy,  quoted  on  wasteful 
duplication  of  stores,  58  n. 

Tousley,  E.  M.,  account  by,  of  con- 
sumers' co-operation  and  its  pros- 
pects in  Northwestern  states,  294- 
299 

Trade-marked  goods,  handling  of, 
by  co-operative  stores,  197-201 

Trade  papers  for  store  workers,  160 

Tri-State  Association,  293 

Trusts,  co-operation  an  effective 
way  of  fighting,  1 28-131 

Turkey,  co-operative  movement  in, 
248 

V 

Vanderbilt,  Commodore,  achieve- 
ments of,  in  impro%ing  distribu- 
tion, 47 


Vegetables,  diagram  showing  main 

channels  of  distribution  for,  48 
Vehicles  for  delivering  goods,  195 
Victualling  Union  of  War  Workers, 
in  Austria,  245-246 

W 

Waldron,  William  L.,  cited  concern- 
ing short  weights,  3^ 

Walker,  John  H.,  on  co-operation  as 
the  cure  for  high  cost  of  living, 
87  n. 

Warbasse,  Dr.  J.  P.,  report  by,  on 
co-operative  store  societies  in 
Illinois,  293-294 

Waste,  general  sources  of,  in  dis- 
tribution of  commodities,  46-56; 
in  retailing  methods,  57-64;  avoid- 
ance of,  in  salesmanship  and  ad- 
vertising under  co-operation,  106- 
III 

Wealth,  centralization  of,  an  evil  of 
competitive  system,  65-67;  rem- 
edy for  centralization  of,  found 
in  co-operation,  135-137 

Webb,  Catherine,  Industrial  Co- 
operation by,  215  n.;  quoted  and 
cited,  217  n.,  220 

Webb,  Mrs.  Sidney.  See  Potter, 
Beatrice 

Weld,  L.  D.  H.,  The  Marketing  of 
Farm  Products  by,  quoted,  47  n. 

Wcslowsky,  Morris,  quoted  on 
wastefulness  in  distribution  of 
fruits  and  vegetables,  50 

West  Indies,  co-operative  movement 
in,  253-254 

Wetz,  James  E.,  Chicago  "Egg 
King,"  quoted,  51 

W  heats  fieaf,  English  co-operative 
periodical,  205 

Wholesalers,  function  of,  56;  saving 
to  be  effected  by  dispensing  with, 

56-57 
Wholesale  societies,  advantages  of, 
92;  trade  done  by,  in  1916,  251 


328 


INDEX 


Wholesale  Societies,  Co-operative, 
in  England  and  Scotland,  92, 
125,  128-129,  221-225 

Wiley,  Harvey  W.,  cited  on  extent 
of  impure  food  evil,  24;  quoted  on 
elimination  of  adulteration  and 
debasement  of  goods,  by  abolish- 
ing desire  for  profit,  81-82 

Williams,  Harold,  quoted  on  co- 
operation in  Russia,  236  n. 

Williams,  John  R.,  quoted  on  waste 
in  distribution  of  milk,  60 

Wilson,  William  B.,  "What  it  Costs 
to  Live"  by,  cited,  41  n. 

Window  dressing,  as  advertising,  206 

Wisconsin  Co-operative  Law,  text 
of,  301-306 

Withers,  Hartley,  Poverty  and  Waste 
by,  quoted  and  cited,  6  n.,  68 

Women,  as  the  nation's  spenders, 
20  n.;  part  of,  in  securing  pure 
food,  28-30;  equality  of,  with  men 
in  co-operative  societies,  133;  as 


directors  of  a  co-operative  so- 
ciety, 179 

Woolworth  Company,  profits  of  the, 
62 

Workers  in  co-operative  stores,  en- 
listing and  developing,  153-162 

World  war,  international  spirit  re- 
tained by  co-operation  during, 
134;  effect  of,  on  co-operation  in 
France,  238-239;  effect  of,  on  co- 
operation in  general,  246 

Wuttig,  A.,  F.  W.  Raifeisen  by, 
quoted,  232  n. 


Yoakum,  B.  F.,  quoted  on  reform 
needed  in  cost  of  distribution, 
40  n. 


Zionist   colonies    in    Palestine,    or- 
ganization of,  co-operatively,  253 


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